Lam Research Corporation Announces $10 Billion Share Repurchase Authorization and a 10-for-1 Stock Split

Rhea-AI Summary

Lam Research announced a $10 billion share repurchase authorization and a 10-for-1 stock split. The share repurchase aligns with their plan to return 75% to 100% of free cash flow to stockholders. This authorization supplements previous ones and has no termination date. The stock split will be effective after market close on October 2, 2024, with trading on a post-split basis starting October 3, 2024. Adjustments will be made to various equity plans and agreements. Lam Research supplies innovative wafer fabrication equipment and services to the semiconductor industry and is a FORTUNE 500® company.

Positive

• Announcement of a $10 billion share repurchase authorization.
• Plan to return 75% to 100% of free cash flow to stockholders.
• Stock split at a ratio of 10:1.
• Stock split effective after market close on October 2, 2024.
• Post-split trading begins on October 3, 2024.
• Proportionate adjustments to equity awards, incentive plans, and agreements.
• Lam Research is a FORTUNE 500® company.

Negative

• No termination date for share repurchase program could lead to uncertainty.
• The repurchase program may be suspended or discontinued at any time.

Insights

Financial Analyst

Lam Research Corporation's announcement of a $10 billion share repurchase authorization is a significant indicator of the company's strong financial health. Share repurchases are often a way of returning value to shareholders, signaling that the company believes its stock is undervalued. This move could provide a positive boost to the stock price in the short term as it reduces the number of shares outstanding, which can increase earnings per share (EPS).

Additionally, the stock split at a ratio of 10:1 is noteworthy. A stock split doesn't change the market value of the company but makes shares more affordable for retail investors, potentially increasing liquidity and investor base. For instance, if the stock was trading at $1,000, post-split, it would trade at $100 per share. This move aims to make shares more accessible to a broader audience, which could enhance market participation and trading volume.

In summary, the repurchase authorization indicates a robust cash position and a commitment to return cash to shareholders, while the stock split aims to make the stock more attractive and accessible. However, investors should also consider the long-term implications and the company's ability to maintain such capital return initiatives.

Market Research Analyst

The semiconductor industry has been experiencing significant growth, driven by demand for advanced technologies like AI, IoT and 5G. Lam Research, as a key supplier in this sector, stands to benefit from these trends. The share repurchase and stock split could be seen as strategic moves to strengthen their market position and appeal to a broader investor base.

From a market perspective, the share repurchase suggests confidence in the company's future cash flows and financial stability. This can be particularly reassuring in a volatile market. The stock split, on the other hand, is likely to improve liquidity and attract more retail investors, who often find high-priced stocks less accessible.

It's also important to consider competitive dynamics. As companies in the semiconductor industry continue to innovate, maintaining a strong financial position helps Lam Research invest in R&D and stay ahead in technology development. However, reliance on a few key customers and potential supply chain disruptions could be risks to monitor.

FREMONT, Calif., May 21, 2024 /PRNewswire/ -- Lam Research Corporation (Nasdaq: LRCX) today announced that its Board of Directors approved a $10 billion share repurchase authorization and a forward split of its outstanding shares of common stock at a ratio of 10:1.

"The share repurchase authorization announced today will execute over an indeterminate period of time and is consistent with our plan to return 75% to 100% of free cash flow to stockholders in the form of dividends and share buybacks," said Doug Bettinger, Lam's Executive Vice President, and Chief Financial Officer. "Furthermore, the stock split announced today will enable a larger proportion of Lam's worldwide employee base to participate in the company's employee stock plans."

The company is authorized to repurchase up to $10 billion of common stock. The new share repurchase authorization supplements the remaining balances from any prior authorizations. Repurchases may be made through both public market and private transactions and may include the use of derivative contracts and structured share repurchase agreements. This repurchase program has no termination date and may be suspended or discontinued at any time.

The stock split is expected to be effective after market close on Wednesday, October 2, 2024, for stockholders of record at that time. Lam Research's common stock will begin trading on a post-split basis at the market open on Thursday, October 3, 2024, under the company's existing trading symbol "LRCX."

As a result of the stock split, proportionate adjustments will be made to the number of shares of Lam Research's common stock underlying the company's outstanding equity awards, equity incentive plans, and other existing agreements, as well as exercise or conversion prices, as applicable. The company anticipates filing a Form 8-K with the U.S. Securities and Exchange Commission after the occurrence of the stock split to report an amendment to the company's Restated Certificate of Incorporation effecting the stock split and reflecting a proportionate adjustment to the total number of authorized shares of Lam Research common stock.

About Lam Research:

Lam Research Corporation is a global supplier of innovative wafer fabrication equipment and services to the semiconductor industry. Lam's equipment and services allow customers to build smaller and better performing devices. In fact, today, nearly every advanced chip is built with Lam technology. We combine superior systems engineering, technology leadership, and a strong values-based culture, with an unwavering commitment to our customers. Lam Research (Nasdaq: LRCX) is a FORTUNE 500® company headquartered in Fremont, Calif., with operations around the globe. Learn more at www.lamresearch.com. (LRCX)

Caution Regarding Forward-Looking Statements:

Statements made in this press release that are not of historical fact are forward-looking statements and are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements relate to, but are not limited to: our plans to repurchase shares; our ability to fund share repurchase activities; our plans to return free cash flow to stockholders in the form of dividends and share buybacks; our plans to make dividend payments or declare dividends; and the completion of the anticipated stock split. Some factors that may affect these forward-looking statements include: trade regulations, export controls, trade disputes, and other geopolitical tensions may inhibit our ability to sell our products; business, political and/or regulatory conditions in the consumer electronics industry, the semiconductor industry and the overall economy may deteriorate or change; the actions of our customers and competitors may be inconsistent with our expectations; supply chain cost increases and other inflationary pressures have impacted and may continue to impact our profitability; supply chain disruptions or manufacturing capacity constraints may limit our ability to manufacture and sell our products; natural and human-caused disasters, disease outbreaks, war, terrorism, political or governmental unrest or instability, or other events beyond our control may impact our operations and revenue in affected areas; and our ability to generate revenues necessary to conduct the share repurchases and issue dividends; as well as the other risks and uncertainties that are described in the documents filed or furnished by us with the Securities and Exchange Commission, including specifically the Risk Factors described in our annual report on Form 10-K for the fiscal year ended June 25, 2023 and our quarterly report on Form 10-Q for the fiscal quarter ended March 31, 2024. These uncertainties and changes could materially affect the forward-looking statements and cause actual results to vary from expectations in a material way. The Company undertakes no obligation to update the information or statements made in this press release.

Company Contacts:
Ram Ganesh
Investor Relations
(510) 572-1615
Email: investor.relations@lamresearch.com

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SOURCE Lam Research Corporation

FAQ

What did Lam Research announce on May 21, 2024?

Lam Research announced a $10 billion share repurchase authorization and a 10-for-1 stock split.

What is the purpose of Lam Research's share repurchase authorization?

The purpose is to return 75% to 100% of free cash flow to stockholders through dividends and share buybacks.

When will Lam Research's stock split be effective?

The stock split will be effective after market close on October 2, 2024.

When will Lam Research's post-split trading begin?

Post-split trading will begin on October 3, 2024.

What adjustments will be made due to Lam Research's stock split?

Adjustments will be made to the number of shares underlying equity awards, incentive plans, and other agreements.