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Technology Stocks : LSI Corporation

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To: DavidG who wrote (7521)	10/28/1997 8:54:00 PM
From: Serge Collins	Read Replies (1) of 25814

DavidG; It is very difficult to know whether a company announces a buyback as a ploy or whether the intent is genuine. In LSI's case it could very well be genuine but that doesn't mean that they would buy their stock back at this time. They might just want to wait until the dust settles a bit. If LSI were to buy back their stock they would have to file with the SEC and this would be reported as an insider purchase. The problem here is that it could take a number of weeks before it becomes public knowledge. I read recently that in the last two years less than 25% of companies announcing a buyback actually proceeded to buyback their stock. As for your point on option plans and employee stock plans, these shares are issued out of treasury or on the open market. However, many companies like to buy their stock back to cushion the impact of issuing shares from treasury for these plans and that is one of the other reasons to be wary of these buyback schemes. LSI was one of the worst offenders of earnings dilution brought about by option granting last year. Barron's ran a big article on that very subject this summer and LSI was mentioned in the article.

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