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Technology Stocks : LSI Corporation

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To: Jock Hutchinson who wrote (19394)	7/21/1999 12:52:00 AM
From: shane forbes	Read Replies (1) of 25814

Congratulations on your newborn! Give me a break on the Symbios thing. If you recall correctly when LSI made that purchase I sent a note to LSI IR saying it was a beautiful purchase and that the analysts were dead wrong and time would tell - it's best to buy cheap and Warren Buffet does the same. The only thing that baffled me was how the price did not move. Incidentally I started getting into FC last summer - see the stock prices then and see the prices today. Nuff said about this. Cha ching! Cha ching! Cha ching! Cha ching! Cha ching! Cha ching! Cha ching! Cha ching! Cha ching! Cha ching! Cha ching! Cha ching! They are in bubble status now. But it's been a good ride for sure. Nice to see you are copying what I did earlier about the P/S ratios BTW! Remember my posts where I subdivided the company into 2 and said gate array vs. std. cell and applied average growth rates to the 2 segments and P/S ratios to the 2 segments. I know you can. So don't tell me to take a shot at something I did a year and a half ago! I've long progressed beyond P/S ratios! The funny thing is that all the stuff that I thought was the be all and the end all of financial analysis about 1-2 years ago I now laugh at for complete and utter ridiculous simplicity. I have a better understanding now. Ask yourself how come in America where the average person has a tough time calculating a percentage right (it happened right here on this thread if I recall - something about stock market gains in percentages - by whom I can't recall) who made all of us stock market investors CFO's and CFA's all of a sudden? No one. Though financial analysis is not rocket science it is not trivial and it certainly is not as trivial as many of us are led to believe. And worse it is most difficult to apply to precisely the stocks that most people happily blindly simplistically apply it to! As to Coreware I still recall them saying 30% of biz is Coreware right now. As to std. cells sure the trend is very definitely good but it still belies the fact that when you own a fab you must fill a fab. Running several tiny designs through does not seem the best way to get the most out of a $1b+ fab. As to nothing new as much as people want to say something new everyday you just can't. This is akin to planting trees not mowing lawns. You do it once and then you wait. You don't chop chop every week. At least I don't. As to unabashed exuberance after the quarter last year that was more so a big sigh of relief after the other disastrous news results coming out of the other companies. If you recall that piece that I wrote for SI entitled - LSI Logic: Are we there yet? or something like that. I started out by saying how LSI was a darling of the tech world in 1994/5 and how it was thought of as being immune to the tech slump and how this had been proven wrong and suggested that this was another time when this thesis was going to be tested. So I was very well aware that it was not a sure shot. But I did not hold a large portion in semis at the time and I was willing to let it go down if that was the case. LSI was the one I held because it had a chance. The others had no chance. I did not think we'd see 11 but the market overreacts and it did so in spades that time. As to the c.call I sure would like to hear the CDMA story too. And while they're at it they can tell us how their foundry plans are progressing - such as how much incremental revenue is this going to produce until the Malay fab takes over in 2001 or whenever. AMD's K-7 is better than Intel's latest greatest. If the dopes at AMD can get it right they can put the schtick to Intel this time (for once, for real) and Intel's ungodly margins on the high end can come down (I hope). I'm still rooting for IBM or someone to do something here. Intel never gets the ratios of the other big techs and it won't because they don't have a diversified product line (ala CSCO) and they have monster fixed charges (not ala MSFT) - both of these are not going away anytime soon. Intel's P/E during the PC heyday was still 'low' relative to the bigwigs. As to Intel's Xeon chips you bet they are doing well - I have said here before that the only reason to hold Intel is because of their dominance here - basically they have a license to print money and they are doing a lot of printing these days. I would love to see a breakdown of Intel's profitability by chip but I never will. Oh yeah and you are wrong about the 1.85 billion - again. Here's one more to chew on. LSI did 457 mil in Q1 sales. My sense is that no more than around 325 came from the LSI of old and the rest was entirely from Symbios. Re: "By the way, I am looking at 10% increase in revenue and $.23 a share." If it happens we are in excellent shape. Considering that during the c.call they said 5-6% sequential growth was to be expected I hope you are not hyping the stock here! Ha Ha. As to SI forget it. Their new site may be going in the right direction. But right now you have more coffee house chatter than anything else. In the final analysis I keep a list of beautiful stocks. LSI is not one and never will be until they can show me that they can radically improve their profitability. Until then they are definitely nowhere close to being in 'God' status in my book. But the story is an interesting one and it has been for awhile.

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