In search of the big bounce:LSI longs smell an opportunity
In search of the big bounce
INSP and LSI longs smell an opportunity
By Shawn Langlois, CBS.MarketWatch.com
Last Update: 5:15 PM ET Jul 27, 2000 NewsWatch
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SAN FRANCISCO, CA (CBS.MW) - Pain ... pure financial pain. Everybody feels it at one time or another, and this week the tempestuous stock market divvied out more than its share of fiscal pummelings.
Oh, but those steely-eyed optimists that frequent the InfoSpace and LSI Logic message boards hardly even flinched. In fact, some went so far as to embrace the notion of a fire sale as a gift from the market gods.
Despite matching Street estimates of 29 cents a share, LSI Logic (LSI: news, msgs) came up a bit short in revenue, thereby triggering a massive sell-off on Wednesday. But did the shareholders panic? Nah, by the looks of cyber-sentiment, it just might be buying time.
On Raging Bull, a poster known only as Knowledge set the tone: "It's amazing that there was such a huge sale going on in LSI's stock. Wall Street seems to be ‘penny-wise, pound foolish.' The major negative seems to be that LSI missed $30 mil or so of its revenue estimate, which is ‘peanuts.' On the positive side, the company improved margins, gave a strong guidance of growth going forward ... order bookings were good and even the $30 mil shortfall that Wall Street worried about was shipped just a day late, on July 1.
"Also, to put in perspective, the lowest that LSI fell even during the worst days of NASDAQ crash in April/May was around $45 -- significantly higher than today's price. Finally, the PE based on FY 2000 estimates of $1.25 is 26.75, pretty low for a company expected to grow at 20.9 percent annually long-term.
"Bottom line, this is an incredible opportunity to buy a sound company that has been battered for a rather flimsy reason. I hope to look back at this day five years from now and say "What was Wall Street thinking?'"
Stavros felt much the same way: "This is one of the best semiconductor companies out there. No, it's not one of the biggest, but what you have to love about this company is that it's diverse. It's involved in broadband, DVD, fiber, etc. Wall Street overreacted a great deal. A drop by a few points, if any, would have been rational. But this is completely ridiculous. We've been in an interest rate environment for the past several months now and companies are getting punished more than they deserve."
The resolute mood was clear over on Silicon Investor where Grand Poobah did a little head-scratching: "I don't see any good reason for a drop in stock price. The future is brighter than expected. Revenues are ramping faster than plan, LSI keeps getting more and more design wins which are ramping into production, and LSI continues gathering key technologies and executing in getting them to market. The gross margin issue is short-term and related to capacity constraints in fulfilling higher-than-expected demand. There is no sign that the communications boom cycle that is driving LSI is anywhere close to its end yet."
Lo and behold, LSI gave longs a reason to hold on to that shred of hope with a trend-bucking $1.50 bounce in Thursday's session ... but keep the champagne on ice - there's a lot of retracing left to be done.
Misery loves company
The devoted InfoSpace clan endured on Thursday what LSI longs squirmed through on Wednesday - a severe and unrelenting beating.
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