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Technology Stocks : LSI Corporation
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To: uu who wrote (8779)1/4/1998 1:59:00 PM
From: Michael F. Donadio  Read Replies (2) of 25814
 
To All: LSI mentioned by Michael Murphy in NY Times Today (1/4/98)

In the Business and Money section of today's NY Times, Michael Murphy is interviewed on why and how to invest in technology. The interview I found to be interesting and informative. He goes into a discussion of valuation of technology companies by evaluating their "growth-flow", which involves adding R&D/share to earnings/share. The ratio of stock price to growth flow for technology companies will tip you off that a stock is cheap, better than the P/E ratio. He is asked:

Q: "What are some good growth-flow companies?"

A: "LSI Logic is a semiconductor company that has had earnings of about $1.15 a share for the last 12 months. The R&D per share is $1.30--they actually spend more on R&D per share than they're reporting in earnings. The management could slash the R&D and report much better earnings, and Wall Street would undoubtedly run the stock from where it is today, which is about a little over $20, up to $30.

But that would be a very short-term thing to do. Instead, LSI Logic will invest the money, produce new products and drive up earnings. The stock's going not only to $30, but to $40 or $45. We actually have a target of $50 for that stock."

The full article can be read at:
nytimes.com

Michael

P.S. Can anyone tell me how to make the lettering bold or italic in replies. Thanks.
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