Tag Archives: lrcx

Could Lam-KLA Marriage Face ‘Deal-Killing’ Objection By Intel, TSM?

Lam Research ( LRCX ) and KLA-Tencor ( KLAC ) could be forced to trim competitive segments to push through the $10.6 billion merger that threatens to swallow rival Applied Materials ( AMAT ), Semiconductors Advisers President Robert Maire said Monday. And unlike Applied Materials’ failed attempt to acquire Tokyo Electron, Lam only sees $250 million in initial savings and therefore has less wiggle room to negotiate potential antitrust remedies, Maire wrote in a research report. “Both Lam and KLA are already superbly run companies without a lot of cleaning up to be done,” he wrote. “This suggests that there is not a lot to be gained in efficiency by the combo as they are already quite profitable as separate entities.” The synergies, however, have likely prompted antitrust concerns. Last week, the U.S. Department of Justice sent a “ second request ,” asking for more information into Lam’s plan to buy KLA. Now, the duo could be forced to sign a “plea bargain,” Maire said. KLA products measure competitors’ dep and etch tools, leading to a “fox guarding the hen house” paradigm where a Lam-owned subsidiary would be charged with rating rivals’ tools. Under the DOJ consent decree, KLA could be forced to divest those businesses or license its technology. “The range (of potential remedies) is quite broad, from almost zero cost to deal-killing cost and everything in between,” Maire said. Applied Materials and Tokyo Electron eventually called off their merger in the face of stringent regulatory concerns. After the DOJ rules, the Lam-KLA deal still faces potential fights from regulators in Japan, China, Korea and the Netherlands, where a number of rivals operate. And major chip manufacturers Intel ( INTC ) and Taiwan Semiconductor Manufacturing ( TSM ) also will likely have objections, Maire says. “We would imagine that they are concerned about their suppliers gaining too much leverage against them and holding too much consolidated power,” he wrote. “Both are probably happier with the status quo.” On the stock market today , Lam and KLA stocks were each rose a fraction, trailing a 1% rise in Applied Materials stock. No. 1 chip-gear maker ASML ( ASML ) stock also rose a fraction Monday.

Applied Materials Q3 Guidance Tops By $300 Mil After Narrow Q2 Beat

No. 2 chip-gear maker Applied Materials ( AMAT ) toasted Wall Street’s current-quarter guidance expectations late Thursday and reported in-line Q2 metrics, prompting shares to rise in after-hours trading. Late Thursday, Applied Materials stock was up more than 4% in after-hours trading Thursday, after the company posted its Q2 earnings results. Shares closed down a penny in the regular session in the stock market today , at 19.91. Top rival ASML ( ASML ) stock fell 1.3% Thursday. Soon-to-merger KLA-Tencor ( KLAC ) and Lam Research ( LRCX ) stocks split the difference, down and up less than 1% each in the regular session. IBD’s 34-company Electronic Semiconductor-Manufacturing industry group fell nearly 1%. For the quarter ended May 1, Applied Materials reported $2.45 billion in sales and 34 cents earnings per share ex items, flat and up 17%, respectively, vs. the year-earlier quarter. Sales edged analyst views for $2.43 billion and EPS beat the consensus for 32 cents. Three months ago, Applied Materials guided to a 5%-10% sequential increase in sales, implying $2.37 billion to $2.48 billion, and 30-34 cents. Applied Materials guided to a 14%-18% quarter-over-quarter jump in current-quarter sales, implying $2.79 billion to $2.89 billion and topping the consensus of 22 analysts polled by Thomson Reuters for $2.51 billion. Sales would be up 14% vs. the year-ago quarter. EPS minus items guidance for 46-50 cents was a dime above Wall Street at the low point, and would be up 45.5%.

Applied Materials’ 3D ‘Tide’ Won’t Help It Outpace Rivals Lam, KLA

Applied Materials ( AMAT ) could surf the “rising tide” of 3D Nand, but rival Lam Research ( LRCX ) will likely outgrow the No. 2 chip-gear-maker, a Needham analyst said Wednesday ahead of Applied Materials’ Q2 earnings report, due after the close Thursday. In afternoon trading on the stock market today , Applied Materials stock was up 2%, near 20, leading soon-to-merge rivals Lam and KLA-Tencor ( KLAC ), whose shares were up 1.8% and 1%, respectively. The three trail ASML ( ASML ) in terms of market value. ASML stock was up 1% Wednesday afternoon. For its fiscal Q2 ended in late April, Applied Materials is expected to report $2.43 billion in sales and 32 cents earnings per share minus items, flat and up 10%, respectively, on a year-over-year basis. That would come off 4% declines for both metrics in Q1. Three months ago, Applied Materials guided to a 5%-10% sequential jump in sales ($2.37 billion to $2.48 billion) and 30-34 cents EPS ex items. Needham analyst Y. Edwin Mok reiterated his buy rating and 22 price target on Applied Materials stock. Mok and Credit Suisse analyst Farhan Ahmad both expect Applied Materials to report an in-line Q2. But Mok sees potential upside to Applied Materials’ Q3 guidance on strength in 3D Nand flash memory demand. Lam recently guided to 9% quarter-over-quarter shipment growth for Q2. Mok expects Applied Materials to “grow similarly, although likely at a slower pace than Lam.” He sees Applied Materials guiding to 2%-7% sequential growth for Q3 vs. consensus of 22 analysts polled by Thomson Reuters, which models 3% quarter-over-quarter sales growth. Ahmad, on the other hand, expects in-line Q3 guidance. For the second half of the year, display revenue could be guided up 10%-20% vs. last year’s flat quarter, but DRAM (dynamic random-access memory) guidance could disappoint. “DRAM second-half revenues could be ticked down to flat (vs. the prior period),” he wrote in a research report. “Expectations are relatively high. Most investors expect a beat than a miss,” but DRAM has been macroeconomically slogged for several years on slowing PC sales. He kept his outperform rating and 23 price target.