Seeking Alpha
Profile| Send Message|
( followers)  
See, you really need to listen to the conference call. As I noted in my pre-Apple lull Wednesday, Lam Research (NASDAQ:LRCX) reported pretty good results for the December quarter, and actually traded up in the after market initially. But everything changed during the conference call.

On the call, CEO Steve Newberry said the company expects March quarter revenue down 5%-7%,with revenue between $635 million and $650 million and EPS of $1.03 to $1.07 a share; the Street had been expecting better, and estimates are falling. For the full year, Lam is looking for $4.10 to $4.30 a share. The company sees 5% growth in capital spending by the chip industry this year, with flat demand for etch equipment. And here’s the big thing: The company also noted that it has suffered push outs in the March quarter from DRAM, logic and foundry companies.

All of that is weighing heavily on Lam shares today, and by extension on the semiconductor equipment companies as a whole. Much of the commentary today focused on the push outs; it is a development that has left the Street on edge about the near-term prospects for the semi equipment stocks. Here’s a rundown on some of the commentary from this morning:

  • Jay Deahna, J.P.Morgan: Based on the cockroach theory, investors will fear further push outs,which is reasonable in our view. As a result, LRCX and other equipment stocks are likely to stagnate until there is improved visibility on chip inventory depletion and a re-acceleration in equipment demand.
  • Robert Maire, Needham: Downgrade to Buy from Strong Buy. Lam is seeing push outs of the March quarter into the June quarter…the fear that investors an analysts have is that June business will get pushed as wll turning into a rolling push out.
  • Satya Kumar, Credit Suisse: Management talked down [second half expectations] with exceptional clarity and purpose, yet [it is] ramping [operating expenses] - would only make sense if new product traction is moving in the right direction. We side with the company’s strategy given [its] track record. Rating: Outperform
  • Timothy Arcuri, Citigroup: Despite share gains in the memory market, we believe competitive threat form Applied Materials and Tokyo Electron are escalating and could impact incremental share gains. Furthermore, given current trading levels, we find a less-than-ideal risk/reward ratio for the stock, as we feel there is more near-term downside risk than upside appreciation…[Operating expenses] ramping significantly at just the wrong time, gross margin under pressure even before impact of new products, etch competition continues to intensify, tough to catch a falling knife with memory exposure so high. Rating: Sell.
  • Raj Seth, Cowen: LRCX is a great company - one we want to own long term - but we’ll remain on [the] sidelines as we expect further capacity digestion, especially in flash where LRCX has strong exposure. Rating:Neutral.
  • Patrick Ho, Stifel Nicolaus: The discussion about increasing tool push outs and a declining rate of capacity expansion near term are further indications of a potential order slowdown across the industry.
  • Mark Bachman, Pacific Crest: Near-term noise will likely test investors’ conviction, but we are undeterred…Disbelievers will miss this opportunity to buy…maintaining our $66price target.
  • In yesterday’s trading:

  • Lam was down $7.95, or 15%, to $46.18
  • Applied Materials (NASDAQ:AMAT) was down $1.16, or 6%, to $18.24.
  • Novellus (NASDAQ:NVLS) was down $2.05, or 6%, to $30.33.
  • Varian Semiconductor (NASDAQ:VSEA) was down $5.54, or 12%, at $40.54.
  • KLA-Tencor (NASDAQ:KLAC) is down $3, or 6%, to $48.25.
  • Source: Semiconductor Equipment Companies Suffer Push Out Worries