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Technology Stocks : LSI Corporation
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To: Tony Viola who wrote (19359)7/19/1999 5:23:00 PM
From: shane forbes  Read Replies (4) of 25814
 
"Shane, what's inside all those routers, hubs, modems, switches, bridges etc. that Cisco, Lucent, etc. are getting rich on? 200 - 400 million only?"

[Modems don't count - lousy biz.]

What's the size of LSI's networking biz? How many players in here? How much experience do they have? Next look at Broadcom's revenue? Then PMCS's then the others. Now note that these are several markets and not just one (unlike the MPU biz - which is 2 or 3 at best). Each is small with solid players and expertise does not carry over. It will cost Intel dearly to get into these areas.

[For instance, I think the network processor market that Intel is going after is expected to be 300 mil in a few years - that's all.]

The key is Intel needs a new huge monolithic segment with a good growth rate.

Intel's problem is that there isn't one. The 'Internet' is huge but it is not monolithic.

I saw Intel's entry into the DSL modem market. Ask yourself what the margins on these are compared to Intel's MPU biz. Answer: likely much lower. (Intel is likely doing this to accelerate broadband acceptance just as they are doing the video thing. But these are still not the best of markets to get into. Now ask yourself why Intel is going after low margin markets ? That is the question of the day.)
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