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Lam Research stock plummets after supply-chain issues lead to disappointing sales and earnings forecast

Lam Research Corp. shares plunged in late trading Wednesday after the chip-equipment supplier reported worse fourth-quarter revenue and first-quarter guidance than expected, which the chief executive attributed to “supply chain conditions.”

Lam Research

reported fiscal second-quarter net income of $1.2 billion, or $8.44 a share, compared with $869.2 million, or $5.96 a share, in the year-ago period. Adjusted earnings, which exclude amortization and other items, were $8.53 a share, compared with $6.03 a share in the year-ago period.

Revenue rose to $4.23 billion from $3.46 billion in the year-ago quarter, but came in lower than analysts’ consensus estimate amid a global semiconductor shortage. Analysts surveyed by FactSet had forecast adjusted earnings of $8.52 a share on revenue of $4.41 billion, based on Lam’s forecast of $7.95 to $8.95 a share on revenue of $4.15 billion to $4.65 billion.

“While supply chain conditions worsened in late December and are causing near-term impacts to our results, we expect wafer fabrication equipment investments to again increase in calendar year 2022, leading to another strong growth year for Lam,” Chief Executive Tim Archer said in a statement.

Shares dove more than 10% in after-hours trading immediately following the release of the results, following a 1.4% gain in the regular session to close at $596.67.  

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Read: Chips may be sold out for 2022 thanks to shortage, but investors are worried about the end of the party

Lam forecast fiscal third-quarter adjusted earnings of $6.70 to $8.20 a share on sales of $3.95 billion to $4.55 billion. Analysts on average were projecting earnings of $8.72 a share on revenue of $4.49 billion heading into the report, according to FactSet.

Smaller rival KLA Corp.

is scheduled to report its quarterly earnings after the close of markets Thursday.

Lam shares have gained 10% over the past 12 months, compared with a 15% rise in the PHLX Semiconductor Index
a 15% gain by the S&P 500 index 
and a 2% advance in the tech-heavy Nasdaq Composite Index

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