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Technology Stocks : LSI Corporation
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To: Skywatcher who wrote (21118)1/18/2000 10:50:00 AM
From: Glen2  Read Replies (2) of 25814
 
Robertson Stephens established a $90 target on LSI today in a new report written by Dan Niles. Key points include:

1. LSI saw a strong Q4 and did not see the expected order slowdown in January. We believe that LSI saw a strong Q4 with upside possible to both our revenue and EPS estimates. There had been some concern about inventory build in Q4 that could affect demand for Q1 but that does not seem to have happened. LSI not only saw very strong orders in late December but order momentum continued into January.

2. We anticipate Q1 revenue growth to be better than the normal 2-3%. The consumer business is expected to see a less than seasonal Q1 decline due to strong PlayStation, DVD, and set-top box business. Sony expects to sell 1M units of PSII in its first week and 10M in the first year. LSI gets more revenues per PSII box versus PSI.

3. We expect LSI to announce soon a CDMA design win that takes a former Qualcomm slot in a major Japanese vendor. This phone should have not only voice but data capability and internet access. This would follow their November 17 CDMA phone win with Denso of Japan. We believe that mobile handset sales will approach 1 billion units in 2003 versus 250M in 1999 led by G3 technologies.

4. We are establishing a $90 price target for 2000. We believe that over 100% EPS growth from $1.06 in 1999 to $2.17 in 2000, (which we believe will increase) can lead to P/E multiple expansion to at least 40x leading to a $90 price target for 2000.

Rating: Strong Buy
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