Lam Research Q2 results beat Street

BANGALORE, INDIA: Chip gear maker Lam Research Corp posted quarterly results that beat Wall Street expectations on better margins and strong shipments, and forecast a strong third quarter, as it bets on new product introductions and market share gains.

Lam's shares, which have gained about 60 per cent of their value in last one year, rose as much as 4 per cent to $37 in trading after the bell on the outlook.

The company, which supplies tools for etching circuits onto microchips, said it expects to grow revenue faster than the industry.

Lam forecast third-quarter earnings per share of 80 cents plus or minus 5 cents, on revenue of $620 million, plus or minus $10 million.

Analysts were looking for earnings of 50 cents a share, excluding items, on revenue of $481.9 million, for the third quarter ending March 31, according to Thomson Reuters I/B/E/S.

Lam expects March quarter shipments of about $735 million.

"Looking at the broader industry trends for 2010 we expect the recent strength in customer demand for new systems to continue at least in respect to the first half of the year," a company executive said on a conference call with analysts.

The company expects the market for wafer fabrication equipment purchases in 2010 to be in the range of $20 billion to $22 billion, from 2009 levels of $13 billion.

Q2 tops market

The company posted a second-quarter net income of $69.6 million, or 54 cents per share, compared with a net loss of $24.2 million, or 19 cents per share, a year earlier.

Excluding items, the company posted earnings of 47 cents a share. Revenue rose 72 per cent to $487.2 million.

Analysts expected earnings of 40 cents a share, excluding exceptional items, on revenue of $453.6 million, according to Thomson Reuters I/B/E/S.

Fremont, California-based Lam, which makes machines that etch and clean silicon wafers used for microchips, said deferred revenue at the end of the December 2009 quarter was $134.4 million.

Gross margins rose to 45.8 per cent from 35.8 per cent a year ago.

The company competes with Applied Materials Inc, Novellus Systems Inc and KLA Tencor Corp. Its customers include South Korea's Samsung Electronics, IBM and STMicroelectronics.

North American semiconductor equipment makers posted $863.3 million in orders in December, up 9 per cent from November, indicating signs of a recovery in the chip gear market.

Lam's rival KLA-Tencor, which is scheduled to report on Thursday, is also expected to meet or exceed Street estimates helped by increasing strength in memory orders.

The world's largest producer of chip-making gear, Applied Materials Inc, is expected to post its first-quarter results by the second week of February.

Lam shares closed at $35.54 Wednesday on Nasdaq.