10-QPeriod: Q3 FY2010

LAM RESEARCH CORP Quarterly Report for Q3 Ended Mar 28, 2010

Filed May 5, 2010For Securities:LRCX

Summary

Lam Research Corporation (LRCX) reported a significant recovery in its third fiscal quarter of 2010, ending March 28, 2010. Following a challenging 2009 marked by reduced demand in the semiconductor industry, the company returned to profitability. Revenue surged by 30% sequentially to $632.8 million and increased substantially year-over-year, reflecting improved global economic conditions and a recovery in wafer fabrication equipment spending. This revenue growth drove a healthy gross margin of 46.3%. The company ended the quarter with a strong cash position of $843.8 million, demonstrating effective cash flow management and operational flexibility. While the industry remains cyclical and subject to global economic influences, Lam Research expressed optimism for continued growth in calendar year 2010, anticipating increased customer capital expenditures to meet growing demand for semiconductor devices. Investments in R&D remain a priority to maintain market share and develop new products.

Financial Highlights

27 data points
Beta

Revenue

$632.76M

46.3% Gross Margin

Net Income

$120.30M

19.0% Net Margin

EPS (Diluted)

$0.09

Cash & Equivalents

$461.37M

Free Cash Flow

$109.27M

Financial Statements
Beta
Revenue$632.76M
Cost of Revenue$339.89M
Gross Profit$292.87M
R&D Expenses$81.84M
SG&A Expenses$61.93M
Operating Expenses$143.78M
Operating Income$149.09M
Net Income$120.30M
EPS (Basic)$0.09
EPS (Diluted)$0.09
Shares Outstanding (Basic)1.27B
Shares Outstanding (Diluted)1.29B

Key Highlights

  • 1Revenue significantly rebounded, increasing 30% sequentially to $632.8 million, indicating a strong recovery from the previous year's downturn.
  • 2Gross margin improved to 46.3% from 20.9% in the prior year's quarter, driven by higher revenue, improved product mix, and better factory absorption.
  • 3Net income turned positive at $120.3 million, a substantial improvement from a net loss of $198.4 million in the same quarter last year.
  • 4Diluted EPS was $0.94, a significant turnaround from a loss per share of $1.58 in the prior year's quarter.
  • 5The company's cash and investments balance remained robust at $843.8 million, indicating strong liquidity.
  • 6Operating expenses, while increasing sequentially due to improved performance and compensation, were managed effectively compared to the prior year's quarter, especially when excluding one-time charges from that period.

Frequently Asked Questions

The primary driver for Lam Research's improved performance is the recovery in the global semiconductor industry and overall economic conditions, leading to increased customer demand for wafer fabrication equipment. This translated into higher system shipments and acceptances, boosting revenue and profitability.

The company reported a better product mix and improved factory utilization as key contributors to the higher gross margin of 46.3%. This indicates that the company is benefiting from increased production volumes and more efficient use of its manufacturing facilities, alongside a more favorable blend of products sold.

Lam Research anticipates substantial growth in the total market for wafer-fabrication equipment in calendar year 2010 compared to 2009. They expect continued increases in customer capital expenditures driven by growing demand for semiconductor devices, though they acknowledge the cyclical nature and potential volatility of the industry.

The company maintained a strong liquidity position with $843.8 million in cash and investments. They generated $185.3 million in net cash from operating activities for the nine months ended March 28, 2010, which was used for share repurchases, debt repayment, and capital expenditures. Lam Research believes its current liquidity is sufficient to support operations for at least the next 12 months.