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Wednesday, July 30, 2008

Lam Research (LRCX) 1Q:2009 results

Lam reports much better than expected for the current quarter, beating top and bottom lines. Stock trades up 3. Guidance is significantly below the street at 425-455 mil with street looking for over 500 mil. Despite the dozen questions they got about it, the company says September is the trough for memory spending and foundry spending. They're even predicting a memory shortage in December.

I was thinking they'd give up the notion of an improving December order quarter and they didn't do that. The stock is interesting in that if they're right they're the only ones that believe the case they're laying out right now. It's hard to envision memory shortages with so much oversupply at present but there have been a lot of recent cutbacks in planned capacity additions and the market is dynamic.

For now, Lam is still 75% memory-related business and near-term that's getting worse not better. I can't tell you to buy it... but I can tell you when the cycle turns to buy this one first.

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