The Five Dumbest Things on Wall Street This Week

4. On the Lam

Lam Research (LRCX Quote) is getting slaughtered.

Shares of the Fremont, Calif., chip-equipment maker plunged 13% in heavy trading Thursday after a mixed second-quarter earnings report.

Lam more than doubled its bottom line, as the company benefited from strong demand for its chip-making equipment and related services. Lam says it has been taking market share from its rivals with new product offerings.

But the company said Wednesday it now expects third-quarter shipments to decline, a possible harbinger of an industrywide downturn. Meanwhile, profit margins have been narrowing -- though CEO Steve Newberry sees a bright side.

"I think that the last six months of 2006, there's certainly been a lot of competitive scrambling," he said on a postclose conference call, according to the seekingalpha.com transcript. "I think our competitors kind of realize that the reality of all the market share we were taking couldn't be denied anymore."

Fortunately, other things can still be denied. One analyst inquired about Newberry's remark that, given "flattish spending" by customers, Lam expects to make around $4.20 a share for 2007 on revenue growth in the 10%-15% range. Before going on to explain those numbers, which fall below the analyst consensus estimates, the CEO offered up a critical distinction.

"I didn't give guidance," Newberry said. "I gave potential performance."

It seems investors prefer to see actual performance.

Dumb-o-Meter score: 78. "I'm sure that what will happen is that it will get reported as guidance, but I mean be that as it may," Newberry said of his potential performance outline.