Transcript Analyst Program Introductory Meeting

Lam Research Corporation
(LRCX)
Balal Javed
Adam Martin
Wes Rucinski
Chi Ho Tang
LaKesha Wilson
Tuesday, November 14, 2005
Company Overview
• Lam Research Corporation was founded in 1980
and is headquartered in Fremont, California.
• Lam Research Corporation engages in the
design, manufacture, marketing, and service of
semiconductor processing equipment used in
the fabrication of integrated circuits.
• The company markets its products and services
primarily to companies involved in the
production of semiconductors in the United
States, Europe, Asia Pacific, Korea, and Japan.
Semiconductors At A Glance
• A semiconductor is a solid such as silicon
or germanium that has electrical
conductivity between that of a conductor
and an insulator.
• Semiconductors are an important part of
ICs and are used in all sorts of chips.
• ICs are created by etching on wafers.
• They are then combined into chips and
sawed off from wafers.
Lam’s Products
• Lam specializes in making wafer fabrication and
cleaning products.
• Lam offers a next-generation wafer cleaning
solution, which employs proprietary technology
and can be used throughout the semiconductor
manufacturing process
• Lam has a platform called the 2300. It allows
customers to use this one tool on both the
200mm and the 300mm wafers. Other
companies have two separate tools for the
different sizes.
Markets
Year Ended
June 26,2005
June 27,2004
June 29,2003
(In Thousands)
Net Sales:
United States
234,112
164,528
207,938
Europe
184,014
177,380
148,284
Asia Pacific
582,033
397,681
223,353
Korea
280,605
92,063
111,022
Japan
221,689
104,294
64,637
1,502,453
935,941
755,234
Total Net Sales:
Market Outlook
• The overall Asian region has historically
accounted for a significant portion of our revenues
but has significantly grown in the past few years
45
40
35
North America
Europe
Asia Pacific
Korea
Japan
30
25
20
15
10
5
0
2003
2004
2005
Leading Competitor
• Applied Materials, Inc
– One of the largest integrated circuit fabrication
equipment company
– Engaged mainly in deposition
– 2004 acquired Torrex Equipment Corporation
• Parallel Wafer Processing systems
• FlexStar system
– R&D: outsource certain RD&E activities to
lower cost
Products and Services
• Applied Centura SiNgen®Plus LPCVD
– Silicon Nitride Deposition
• Applied Centura Sprint™Tungsten CVD System
– Tungsten Deposition
• Applied Centura eMax® system
– Etching
• Flat Panel Displays
– AKT supplies plasma-enhanced CVD (PECVD)
systems and electron beam array testers to FPD
manufacturers
Ratios Comparison
Applied Materials
Lam Research
Market Cap
29.08B
5.09B
Return on Equity (ROE)
15.61%
26.26%
$1,638,673,000
$376,273,000
0.846
1.814
PE
21.8
20.62
Debt to Equity
0.51
0
1255746
514818
Operating Margin
22.21%
24.48%
Interest Coverage Ratio
40.50%
283.50%
Free Cash Flow
EPS
Cash and Cash Equivalent
Recent Headlines and
Executions
• Ending August 23th- Previous $250 repurchasing
program accumulated 7 million shares, or net value of
$214 million.
• August 24th- Announce $500 million share buyback
program.
• October 12th- Revenue slides, 1Q profits drop 45%
from last year, but results beat expectations.
• October 13th- Morgan Stanley upgrades Lam
Research from “underweight” to “equal weight”
Charting the Headlines
Nov. 2nd- Breaks
through 52-week high at
a price of $34.84.
Begins rally.
Aug. 24th- Repurchase program
announced. No real effect on
stock price
Oct. 13th-Morgan Stanley
upgrades to “equal weight
Recommendation
• Hold (Equalweight)
• Future Upside
-Possible buyout
-Increase in
semiconductor
industry
DCF = $31.96
Questions????