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Technology Stocks : LSI Corporation

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To: DavidG who wrote (14707)	9/2/1998 3:56:00 PM
From: shane forbes	Read Replies (1) of 25814

Hey David! Alive and kicking and shaking my head! I just went through the big picture thing in a note to Tony. Just a quick note about Symbios. Like a lot of people I too was shaking my head and scratching my noggin' when I first heard about it. Did not make too sense to me because like most people I had no idea (since they were foreign) what exactly they did. I did know they were a premier company and therefore was pleased that we got it at 1 times sales. Still I wanted to know how much assumed debt was taken. Also we have those stock options which may be a lot (maybe 5-10% dilution I would guess). Looks like they got around 450 million in equity and around 650 million and 10% net margins for around 760 million partly in cash and partly in cheap debt. Financially therefore it is not dirt cheap but a very good deal nevertheless. Looking real quickly into the product line I think it makes sense though I again am no expert. Finally and most importantly this pushes LSI out of the mid-caps in terms of revenue to knocking on the door of the big boys - form around 1.3 billion to 2.0 billion in revenues. This is very good since as eveyone knows this is a cap intensive industry and the bigger the better in fact the much bigger the much better. (Gresham has to be used for something) I guess one more advantage - it always makes sense to build 2 kinds of products - one commodity or close to commodity (that is very high volume but low margins) and one very high margins (most of LSI's ASICs etc). The advantage is that when demand explodes for the commodity items fortunes are made and like in 1995 every so often even the most mundane thing goes in short supply. Not sure if Symbios' things ever get to that level but LSI will have the opportunity to be more price - elastic with the boards etc from Symbios than LSI's traditional ASICs sin those have contract based pricing. Besides Flipper and friend as a company emblem - how can you not like them!

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