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Monday, October 27, 2014

LRCX Lam Research Wafer Equipment Fab Outlook & Q1-2015 Conference Call Summary

Lam Research (LRCX Charts and Quote) usually has the best handle on the semiconductor capital equipment industry so I pay attention to what they say. 

Below are my notes from their Q1 2015 Earnings Conference Call (CC) 

Disclosure:  I own LRCX and cover it in my newsletter.  Subscribe NOW and get the October 2014 Issue for FREE! !   

Key Comments from Lam CC prepared remarks by Martin Anstice - President and CEO: 
  • While we plan to provide more detail on the anticipated 2015 WFE spending level and composition in January, we can’t say today that from industry analysis customer and peer commentary to-date at WFE growth rates in the 5% to 10% would be a reasonable starting assumption.
  • We consider that our opportunity in calendar ‘15 is greater than WFE baseline due to etch and deposition markets growing faster than the average of other segments, combined with the relative strength of our product portfolio and sentiments of customer support for which we are sincerely grateful.
Key Comments from Lam CC prepared remarks by Doug Bettinger - Executive Vice President and CFO about Q1 2015:
  • Shipments came in at $1,111 million
  • Revenue came in at $1,152 million and has been now running at a level of $1 billion for five consecutive quarters. Gross margin for the period came in at 45.8%
  • Operating income was $207 million with operating margin of 18%
  • The tax rate was 18%, which was up sequentially due to the geographic distribution of revenue for the quarter with more revenue being generated in the United States.
  • Based on a non-GAAP share count of approximately 175 million shares, earnings per share were $0.96, above the midpoint their guided range.
  • Bought back 4 million shares at an average purchase price of $72.40
  • On July 2nd, Lam paid a $0.18 per share dividend which consumed $29 million.
  • Lam ended the quarter with cash and short-term investments including restricted cash of about $3 billion. "This is down from $2.2 billion in the June quarter with cash generation in the quarter being more than offset by our ongoing share repurchase and dividend programs."
  • Q2 guidance: "We expect shipments of $1.240 billion plus or minus $50 million. We expect revenue of $1.230 billion plus or minus $50 million. We’re forecasting gross margin of 45.5% plus or minus one percentage point. We forecast operating margins of 19% plus or minus one percentage point. And finally we forecast earnings per share of $1.12 plus or minus $0.07 based on a share count of approximately 173 million shares."
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