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Technology Stocks : LSI Corporation

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To: Grand Poobah who wrote (18977)	6/21/1999 12:08:00 AM
From: shane forbes	Read Replies (3) of 25814

GP: As to the Dell model I am not as sure as Corrigan et al. On the one hand it makes a lot of sense to permanently decrease one's working capital by keeping only a little inventory on hand. It also makes sense to keep little inventory if component prices are falling. On the other hand if there are shortages of parts or if prices are on an up-slope is it a good thing to keep minimal inventory? Your customers who depend on you for parts will say NO and your shareholders may or may not be amused. As always there are pros and cons and it is difficult for me to believe that with all the talk of lack of capacity going forward, Y2K, and spot shortages that customers are not building up inventory. But I am guessing... I agree with you about the foundries. Many IC companies would not exist today if the foundries were not present. My sense is that leading-edge fabs were meant for building many of a few types of products (DRAM, MPUs) and NOT for building a few of many types of products (ASICs that are not in the several hundreds of thousands of units). Mainly because it is too expensive to keep a leading-edge fab idle for any length of time. Ideally you would turn on the 'on' switch and let it go. I suspect LSI does not get nearly as much use of the 'on' switch as we would like to believe. Foundries on the other hand spread their fabs' use over multiple players and they can thus compensate reasonably well. But for their clients again there are pros and cons. If you are big enough you are likely in good shape as you have guaranteed capacity or the foundry would not want to lose your biz so they will bend over backwards to get you your capacity etc. But if you are small and are not able to come up with the guaranteed capacity you might be in trouble because you are likely not at the top of the line. Still these smaller companies surely can't build a fab by themselves! If LSI's fab is really as big as they say it is LSI should try and be a part-foundry source (that Malay deal may be enough?). But even here there are problems - such as how much do you allocate to the 'foundry' part and what if LSI's customers demand more product that can't be filled unless part of the foundry part is lowered? It is no secret that 0.18 capacity is in short supply now and if LSI could ever figure out how to utilize their capacity so that they were at 95+% capacity during the good times and their customers not vulnerable, the Earnings would roll in. As to banner ads do you use the 'member login' link on the home pages? I think that should be sufficient but I don't really know.

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