RE Symbios buyout, from the wires...
Symbios Purchase Gives LSI New Mkts, But No Short-Term Gains
NEW YORK -- It's a deal that will make LSI Logic Inc. (LSI) bigger and
broader. But don't look for short-term gains.
Analysts agreed that LSI Logic Corp.'s (LSI) $760 million cash purchase of
Hyundai Electronics America's Symbios unit was a good acquisition, one
that stands not only to bulk up the Milpitas, Ca.-based manufacturer of
parts for electronic devices, but also to give it access to new markets.
And though the sale comes less than a week after Hyundai pulled out of
nearly the same deal with Adaptec Inc. (ADPT) - citing concerns that the
U.S. Federal Trade Commission would see the deal as providing Adaptec
with a U.S. monopoly - it should not be viewed as hasty on LSI's part,
analysts said.
"You can imagine when Adaptec and Symbios announced their deal, LSI
may have felt like they missed out on an opportunity," said Clark Westmont,
an analyst with NationsBanc Montgomery Securities. "Now that the
Adaptec deal fell though, LSI didn't waste any time. They didn't leave any
breathing space for a competitor to come in. I think they didn't want to miss
an opportunity twice."
The addition of Symbios - an information technology company that
specializes in solutions for moving and storing data - will make LSI the
second largest standard cell supplier in the world, said Hans Mosesmann, an
analyst for Prudential securities. It will also provide LSI with access to the
high-end computing and mass-storage markets, according to analysts.
"I think it makes a lot of sense," Mosesmann said.
But that doesn't mean the company will see an immediate return on its
investment. Analysts agree that while the deal offers long-term benefits for
LSI, short-term gains are not in the picture, given such factors as the
situation in the semiconductor and the mass storage sectors.
"At the margin it is a good deal," said Nimal Vallipuram, an analyst with
Bear Stearns. "The catch is putting them both together.'
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