LAM bounces off the bottom

Lam Research Corp. shares stormed up $2.19 per share, or 8 percent, to $28.81 Thursday in early-afternoon trading, reversing a trend that has pushed the semiconductor equipment maker's stock down more than 50 percent this quarter.

A flurry of downgrades from institutional brokers preceded Thursday's gain, as Merrill Lynch, Adams, Harkness & Hill and BT Alex Brown all lowered their earnings expectations for Lam in its second quarter.

First Call consensus pegged Lam for a profit of 11 cents per share in the quarter.

Lam wasn't the only capital equipment maker on the rise Thursday as Applied Materials Inc., Novellus Systems Inc. and Credence Systems Corp. were all slightly up in early trading. Analysts said the slight gains are probably a sign that investors think the stocks have hit rock bottom.

"I don't know of anything in particular going on with Lam today," said Rob Stern, an analyst at Merrill Lynch. "It's probably a case of bargain hunting. This whole segment has hit the skids since August."

Among technology stocks, no sector has suffered more from the instability in Asia than chip-equipment makers. The bulk of new semiconductor manufacturing plants, particular those for dynamic random-access memory chips, are being built in Taiwan, Malaysia and Singapore. Instability in the region has delayed projects and, therefore, put chip-equipment orders in limbo.

Last quarter, Lam lost $12 million, or 32 cents per share, on sales of more than $289 million. Most of the loss was attributed to various acquisition charges.

"They're also having market share problems that are keeping them from exhibiting revenue growth," Stern said. "For that matter, neither has anyone else including Applied Materials."