Lam Research Corporation (LRCX)

1
Lam Research Corporation(LRCX)

• Balal Javed
• Adam Martin
• Wes Rucinski
• Chi Ho Tang
• LaKesha Wilson
• Tuesday, November 14, 2005

2
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.

3
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.

4
Lams 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.

5
Markets
Year Ended Year Ended
June 26,2005 June 27,2004 June 29,2003
(In Thousands) (In Thousands)
Net Sales Net Sales
United States United States 234,112 164,528 207,938
Europe Europe 184,014 177,380 148,284
Asia Pacific Asia Pacific 582,033 397,681 223,353
Korea Korea 280,605 92,063 111,022
Japan Japan 221,689 104,294 64,637

Total Net Sales Total Net Sales 1,502,453 935,941 755,234
6
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

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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
• RD outsource certain RDE activities to
  lower cost

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Products and Services

• Applied Centura SiNgenPlus LPCVD
• Silicon Nitride Deposition
• Applied Centura SprintTungsten 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

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Ratios Comparison
Applied Materials Lam Research
Market Cap 29.08B 5.09B
Return on Equity (ROE) 15.61 26.26
Free Cash Flow 1,638,673,000 376,273,000
EPS 0.846 1.814
PE 21.8 20.62
Debt to Equity 0.51 0
Cash and Cash Equivalent 1255746 514818
Operating Margin 22.21 24.48
Interest Coverage Ratio 40.50 283.50
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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

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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
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Recommendation

• Hold (Equalweight)
• Future Upside
• -Possible buyout
• -Increase in semiconductor industry
• DCF 31.96

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Questions????