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Wednesday, April 23, 2008

Lam Research (LRCX) Q4:2008 preview

Orders are going to stink. Memory capex cutbacks are upon us and severe. The problem is... well, we ought to know that. Who is wildly bullish on memory here besides a handful of Sandisk traders with some fresh spot quotes?

Samsung, a big customer of Lam's, is kind of the only company that hasn't cut back capex. Expect them to bring theirs in also when they report.

The stock probably has good support in the upper 30s. Expect somewhat precipitous orders to be met with cries of the bottom. These are tricky stocks in that the core investor plays long ball. It's dangerous to try to game them on a quarter to quarter basis. The current trend is down but this number will be bad enough that investors will start to think about improving rates of deterioration going forward.

Mattson also reports tonight and should have a similarly gloomy outlook.

I feel a little queasy even thinking that but my experience is this is setting up to be the kind of cataclysm news-wise that you get at bottoms.

It's going to be a bad number... and maybe you've got to buy the aftermath. But let's let them blow up first, shall we?

Needless to say, if we see the kind of cutbacks I hope, it's going to embolden buyers of Micron (MU), who have been pecking away at the stock the last few sessions. I think declining capex orders coupled with a rising spot price for DRAM and NAND can continue to move the stock higher.

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