Lam Research Corporation LRCX reported third-quarter fiscal 2019 non-GAAP earnings of $3.70 per share, which beat the Zacks Consensus Estimate by 32 cents. However, the figure decreased 4.4% sequentially and 22.8% year over year.
Moreover, adjusted revenues decreased 3.3% sequentially and 15.7% year over year to $2.44 billion. However, the reported revenues surpassed the Zacks Consensus Estimate by 1.51%.
Management remains positive about both etch and deposition technologies, which in turn will continue to expand its serviceable addressable market.
Shares of Lam Research have gained 8.7% in the past 12 months compared with its industry’s 5.3% growth.
Top Line in Detail
In the quarter, Korea and Taiwan accounted for 25% and 23% of the company’s total revenues, respectively, while Japan and China contributed 17% each. On the contrary, United States, Southeast Asia and Europe accounted for 9%, 5% and 4%, respectively.
Non-GAAP gross margin came in at 45.1%, which contracted 120 basis points (bps) sequentially.
Non-GAAP operating expenses were $488.4 million, reflecting an increase of 11% sequentially. As a percentage of sales, both research & development and selling, general & administrative expenses marked an increase.
Adjusted operating margin was 25.1%, down 370 bps sequentially. The decrease was primarily due to higher expenses.
Balance Sheet & Cash Flow
At the end of the fiscal third quarter, cash and cash equivalents and short-term investments increased to $6.1 billion from $3.6 billion in the fiscal second quarter.
Cash flow from operating activities was $932.8million, up from $642 billion in the fiscal second quarter. Capital expenditures were $75.5 million, down from $106 million in the fiscal second quarter.
During the quarter, Lam Research paid dividends of $171.2 million.
For fourth-quarter fiscal 2019, Lam Research projects revenues to be $2.35 billion (+/- $150 million). The Zacks Consensus Estimate for the same is pegged at $2.32 billion.
Gross margin is projected at around 45.5% (+/-1%) and operating margin is expected to be 26% (+/-1%).
Non-GAAP earnings are projected at $3.40 (+/- 20 cents) per share on a share count of nearly 155 million. The corresponding Zacks Consensus Estimate is pegged at $3.28 per share.
Lam Research Corporation Price, Consensus and EPS Surprise
Lam Research Corporation Price, Consensus and EPS Surprise | Lam Research Corporation Quote
Zacks Rank & Stocks to Consider
Currently, Lam Research carries a Zacks Rank #4 (Sell). Some better-ranked stocks in the broader technology sector include Amazon AMZN, Ctrip.com International, Ltd. CTRP and Square SQ, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Long-term earnings growth for Amazon, Ctrip.com and Square is currently projected at 31.2%, 23% and 25%, respectively.
Radical New Technology Creates $12.3 Trillion Opportunity
Imagine buying Microsoft stock in the early days of personal computers… or Motorola after it released the world’s first cell phone. These technologies changed our lives and created massive profits for investors.
Today, we’re on the brink of the next quantum leap in technology. 7 innovative companies are leading this “4th Industrial Revolution” - and early investors stand to earn the biggest profits.
See the 7 breakthrough stocks now>>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Amazon.com, Inc. (AMZN) : Free Stock Analysis Report
Square, Inc. (SQ) : Free Stock Analysis Report
Ctrip.com International, Ltd. (CTRP) : Free Stock Analysis Report
Lam Research Corporation (LRCX) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research