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Technology Stocks : LSI Corporation

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To: JCS who wrote (25641)	8/16/2003 10:52:28 PM
From: E_K_S	Read Replies (2) of 25814

Hi JCS - That activity you noticed on Friday was probably option related as this was expiration "Friday" for August. I did go back and check out my 15 min price & volume daily charts for the last week. To my surprise there were some HUGE trades Thursday morning about 30 minutes after the open. The run rate for each 15 min window averages about 100K shares. However on Thursday during that 15 min period there were 1,122K shares traded or just over 11x normal activity at prices between $9.55 - $9.60. At the end of Wednesday the last two hours of trading showed high activity as well with volume running 3-4 times normal at prices between $9.38-$9.61. This activity may have been related to option expiration strategies or perhaps a mutual fund accumulating shares. I would not be surprised to see one of the investment houses release an "upgrade" opinion next week after they have accumulated their position. Management IMO has done a very good job down sizing and restructuring the company over the last 12-18 months given the sustained downturn the industry has experienced. Their free flow cash flow is now positive even though they continue to have excess manufacturing capacity. This bodes well for the future especially with their new product portfolio mix going into a new semi up-cycle. The $64K question is if the new up-cycle has started, how long will it last and to what extent will it gain traction? My guess is it starts very slow and lasts for several quarters at some moderate "low" sustained rate. LSI should be able to make money in this environment. The big payoff will be when we start to see double digit growth across several of LSI's new product sectors. This may occur by Q1 2005 (or even one or two quarters earlier but don't count on it) and hopefully last twenty four months or out through Q1 2007. I have been slowly reallocating bond monies into equities and I suspect many of the large mutual funds have been doing the same (just look at where Fidelity has been buying lately). They key for the smart LSI investor is to average into a position at the bottom of the semi-cycle and sell when it is hitting on all cylinders. This is easier said than done. Since this last restructuring will result in positive free flow cash flow for the company (based on current production volumes), I believe LSI may have turned the corner. The company is set up to make lots of money as the new orders pick up. We just have to wait and be patient. Good luck. Hope you are right that we may be getting some large investors accumulating shares. EKS

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