10-QPeriod: Q1 FY2006

LAM RESEARCH CORP Quarterly Report for Q1 Ended Sep 25, 2005

Filed October 31, 2005For Securities:LRCX

Summary

Lam Research Corporation (LRCX) reported its financial results for the quarter ended September 25, 2005. The company, a provider of wafer fabrication equipment and services, experienced a sequential increase in new orders (3%), indicating a potential positive inflection point after a period of stabilization. However, revenue for the quarter decreased year-over-year, reflecting the prior decline in new orders. Gross margin remained a key focus, coming in at 48.6%, slightly above expectations, though it decreased compared to the prior year due to lower production volumes. The company continues to invest significantly in R&D, with R&D expenses increasing both sequentially and year-over-year, partly due to the adoption of SFAS No. 123R for stock-based compensation. Operating expenses (R&D and SG&A) are expected to remain around $100 million for the next quarter. Lam Research maintains a strong liquidity position, with $873.9 million in cash, cash equivalents, short-term investments, and restricted cash, and continues its aggressive share repurchase program.

Key Highlights

  • 1New orders saw a sequential increase of 3% to $326 million, signaling a potential turnaround after a period of stabilization.
  • 2The company expects new orders to grow between 5% and 10% sequentially in the December 2005 quarter.
  • 3Revenue for the quarter was $320.9 million, down from $419.5 million in the prior year, reflecting the impact of prior order declines.
  • 4Gross margin was 48.6%, exceeding expectations but down from 51.2% in the prior year, attributed to lower production volumes.
  • 5R&D expenses increased to 16.0% of revenue, partly due to the adoption of SFAS No. 123R for stock-based compensation.
  • 6The company repurchased $78.7 million of its common stock during the quarter and has $504.2 million available under its repurchase authorizations.
  • 7Lam Research maintains a healthy liquidity position with $873.9 million in cash, cash equivalents, short-term investments, and restricted cash as of September 25, 2005.

Frequently Asked Questions

Lam Research reported a 3% sequential increase in new orders for the quarter ended September 25, 2005. The company expects this positive trend to continue, forecasting a sequential increase in new orders of 5% to 10% for the December 2005 quarter.

Revenue for the quarter ended September 25, 2005, was $320.9 million, a decrease compared to $419.5 million in the same period last year. Gross margin was 48.6%, down from 51.2% in the prior year, primarily due to lower production volumes, partially offset by improved installation and warranty performance.

Lam Research maintained a strong liquidity position with $873.9 million in cash, cash equivalents, short-term investments, and restricted cash as of September 25, 2005. The company believes this is sufficient to support its anticipated operations, investments, and capital expenditures for at least the next 12 months. They also continue to actively repurchase shares.

Yes, the adoption of SFAS No. 123R, which requires expensing stock-based compensation, has impacted the results. This led to increased R&D and SG&A expenses, as well as impacting gross margin, for the quarter.