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Technology Stocks : LSI Corporation
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To: Jock Hutchinson who wrote (15718)10/17/1998 4:21:00 AM
From: shane forbes   of 25814
 
continued:

6. What's there to like?

(a)More Sales per share.
More Debt.

=> Higher earnings, Higher returns on Equity.

(b)We have had something like 14 straight quarters with revenues between 300 mil. and 349 mil (really only one q was 349m. - can really
change this to about 332 mil).

Now we are at 390 mil (really run-rate is 425 mil) - that's a BIG CHANGE with remember just a little share dilution to boot.

(c) In the context of the messy semicycle this would really be very good performance. Except that expenses have ballooned and though there is a lag time between R&D expense and incorporation into the customer's product "where is the beef" is a very fair question. Well with greater sales automatically our expenses just went down <g>.

(d) Sentiment - CON has been plagued by this greatest thing in the world syndrome - the 2nd coming of the Messiah thing. Well now we are in the reverse situation where thanks to the asset writedowns and the good times elsewhere in the industry people are in a new phase of the we hate LSI mood. This is a good thing.

(e) Std. cells - SYM has a lot, CON has a lot (remember that CON's
new G12 and maybe even G11 are all std. cell designs).

(f) IP - duh!

(h) Bigger company - duh!

(i) More Sales per share

(j) More Sales per share

(k) More Sales per share

(l) There is nothing evil about doing std. products that did not include mucho design time. STM, ADI are 2 companies that I can think of straight off the bat that have a combination very high volume cash cow (std products - things like SLICs) + some non-std. products. Both ought to be successful. LSI is too big to be doing all IP high design intensive low volume products. If theirs was a 100 million in sales company sure it would work. 200,300,400 million even. But not 1.3 billion and owning one's own factories. The biggest expense in this industry is depreciation on the fabs. If the fabs are idle you are literally burning money. Std. products mitigate this considerably.

(m) more sales.

(n) more sales.

(o) more sales.

Shane.
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