I think a lot of Corrigan and the analysts have been saying over the last 3 months is essentially this:
ASICs live at the top of the pyramid. There will always be a need for them. However, as the name implies, the top of the pyramid does not grow much. Thus, LSI has transitioned from a straight ASIC to supplying highly integrated, complicated 'standard' chips for some applications. Thus the 're-structure' into 6 distinct divisions along product lines. This should allow to ship more $ per 'design' and thus should grow both revenues and margins faster than straight ASIC house.
If the above 'story' line holds, then once LSI can prove that through revenue and margins increase, the stock should be given a higher valuation than even today. I hope, I hope ...
As to the sentance 'less likely to pass higher wafer prices on to customers, because they can amortize processing costs over millions of units', that is absolute bull! higher wafer prices and processing costs are variable costs, you don't 'amortize' them like R&D. If they cannot be passed onto the customers immediately, they have to eat that right then and there on the bottom line.
Erica Klauer telling the world that LSI was doomed at a price of $14 just created the greatest buying opportunity there was. As for myself, can't really complain too much about that one <G>.
Well, all eyes are on Intel for Tuesday. My guess is Intel will be fine - AMD got creamed last Q with ASP of $60 and 2.3M units left in warehouse was due to more than just Intel price cut. To get their $60 ASP, I think AMD probably had speed yield problem again. I would not be surprised that their 2.3M units comprise of a lot of slow stuff that's hard to move opposite to the MII E-Machine's 300 and 333. If that is the case, the opposite implication that Intel not only took back market share, but also took back the high end of the market share, may be true. In that case, Intel may just do OK after all. Intel does good, hopefully should pull the whole sector forward.
patrick
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