Lam, Virtela Contract Extended

Zacks

Lam Research Corp. (LRCX) announced that Virtela, a Colorado-based network service provider, has extended its managed services contract to offer its cloud management and networking solutions platform to Lam. The contract now enjoys a four-year extension.

Virtela is the world's largest independent managed network, security and cloud services company. Many leading global companies namely Comcast, Sony (SNE), IBM (IBM), and Kodak depend on Virtela for their networking, security and cloud needs.

As per the agreement, Virtela will work with IBM to provide various services to Lam including Local Area Network (:LAN) and Wireless Local Area Network (:WLAN) designs, application acceleration, security and cloud network services.

Lam Research management expressed their satisfaction stating that Virtela has been delivering high performance enterprise networking solutions across the company's U.S., Europe and Asia-Pacific locations. Lam Research will benefit from Virtela's cost-effective solutions and knowhow.

The entire semiconductor industry is undergoing a shift toward software-centric solutions that eliminate the need for expensive hardware and provide administrators remote access to networks. The need for security and cloud centric solutions is increasing with time. We believe that Virtela’s services will help Lam to deal with the complexities of manufacturing and lower the ownership cost of technologies.

To survive the cutthroat competition and the changing dynamics of the semiconductor industry, companies are entering into partnerships and contracts to provide better solutions at a faster pace to customers.

In the second quarter of fiscal 2013, Lam Research reported $860.9 million of revenues, which was down 5.1% sequentially but up 47.4% year over year. The year-over-year improvement was aided by higher shipments, as a result of escalating demand for LRCX product suites.

Lam Research shares carry a Zacks Rank #3 (Hold). Intersil Corp. (ISIL), which carries a Zacks Rank #2 (Buy), is also performing well and is therefore worth considering.

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