Diffuse Thoughts on Today's Conference Call.
The overall big picture is very good, since Wilf is predicting forward growth of 6 to 8 percent for both quarters sequentially. But that doesn't even begin to portray the absolutely superior outlook that is being painted. Clearly, we have not yet even begun to approach the peek for DVD, DCAM. STBs, and PS II. So all of those goodies begin in earnest in '00 and this product cycle will continue well into '01 and beyond as will the Internet buildup, which is distinguishable from the typical semiconductor cycle. Thus it is quite likely that there will be a longer-term cycle in '02 that in part will mitigate the tyopical semi cycle that pertains to overinvestment.
Obviously the wild card is CDMA. If LSI shows that is can consistently more CDMA product and Dahnes'a scenario of the CDMA market is correct then it is very likely that LSI could show $4.00 per share for '01 with a forward PE of 40. Compared to CDMA, everything else is small potatoes.
What I find interesting about the CDMA scenario is that LSI would quite possibly be capacity constrained in '01 and '02 if it were not for Silterra. Thus, Silterra now makes an awful lot of sense, because those facilities could be used for some of the consumer work if the demand exceeds the supply that Gresham is able to produce.
Am I the only person, but it seems to me that LSI is trying awfully hard to showcase its systems storage business to the extent that it is highlighting its performance in a way that it does not highlight other market segments. And they will clearly have a lot of initial success due to the previous dearth of international marketing expertise that stunted Symbios Storage Systems growth. In short, it looks like some managerial expertise could rapidly enhance the shareholder value of Storage Systems to the extent that in a year, that division alone will sell for the purchase price of all of Symbios, thus bringing about $700 million in cold cash to LSI's coffers—a great start on the next generation cutting edge fab or other IP that is more suitable to their portfolio.
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