Semiconductor equipment maker Lam Research (NASDAQ:LRCX) reported decent earnings Thursday evening -- beating analysts' median EPS estimate of $0.53 (Lam reported $0.59) and just missing the revenue estimate of $382 million with reported revenue of $379.8 million. Better yet, the company pointed out that roughly three-quarters of sales were of the most advanced (and profitable) equipment that the company offers.

Not everything was sweetness and light for the company, though. Management said that the backlog fell by 10% and that they expect orders to fall another 15% to 20% through March. Forward guidance of $0.40 to $0.44 a share mirrors this challenging environment. Interestingly, the Wall Street range for Lam's March quarter was $0.37 to $0.57 -- a wide spread that suggests analysts didn't really have a firm idea of what exactly is going on with the business and/or the industry.

Lam's announcement that business will get tougher is not exactly shocking. Applied Materials (NASDAQ:AMAT) recently announced layoffs. ASML Holdings (NASDAQ:ASML) announced that it has "no visibility" on exactly what its customers were planning to do, and KLA-Tencor (NASDAQ:KLAC) predicted that orders might drop as much as 15% or rise as much as 5% (a prediction on par with "stocks might go up, or they might go down"). All of this uncertainty is due to a fundamental problem with the customers -- semiconductor companies by and large have too much inventory, and they're not going to buy expensive capital equipment until that inventory is worked down.

None of this is really new to Lam; semiconductor equipment has always been a cyclical business. With operating margins higher than even king-o'-the-hill Applied Materials, this is a company that has been around long enough to know how to weather the ups and downs. What's more, the future should continue to be bright as Lam's core business, etch processing, will only continue to grow in importance as chips become more complex (and require more etching).

Investors looking to bottom-fish for stocks near cyclical lows should take a look at Lam. With strong margins and a reasonable valuation, Lam should continue to be a survivor. That said, any prospective investor needs to take a good hard look at the long-term charts for companies like Lam and Applied Materials and ask themselves whether they can live with that much volatility in their portfolio.

Fool contributor Stephen Simpson holds a CFA and has no ownership interest in any stocks mentioned.