E. interesting results from LSI wouldn't you say?
Networking exceptional (figures ASICs being more and more incorporated into networking chips - if one needs speed then one needs ASICs - PLDs don't cut it (hence ALTR's troubles?) anymore - gigabit means million gate designs)
STBs recovering (after several qs of weakness)
consumer - traditional seasonal weakness as expected
computer - gathering momentum finally
Split - roughly 1/3 each.
Fibre Channel (one of the main reasons I like LSI l/t is this) - LSI
has 80%+ of design wins. 80%! Recall my note about how huge FC market will grow in next few years. LSI well positioned.
DCAM - expect big success for 1998 - H2 ramp. Generation 2 chip very good and expect to see much better digital cameras as a result. Current cameras are just generation 1 - so not very powerful currently but expect much better w/ gen 2 chip.
DVD - after comdex many design-ins. Very well positioned again. Best chip in the business by far. As we guessed PC DVD is pretty easy once you have regular DVD player. Not much of DVD and DCAM shipped in 1997. PC DVD end of Q1.
Shares bought back - 2 million at $22/share
Cap exp - 400 million budgeted for 1998. Down from ~550 mil. in 1997
GSM - proprietary mixed signal chip
BTB - about 1
US grew strongly in Q4, Europe moderately up, Japan down (seasonal), little impact non-Japan Asia.
Currency - weaker yen lowered top line 3 million. Bottom line not materially affected (Japanese manufacturing).
Growth rate in 1998 - expects bit faster than overall industry. DVD and DCAM expected to be around high single digit %ge of revenue (i.e., expect huge ramp)
Everyone's talking SOC but no real products except for LSI - Wilfie points out that competitors who are talking about System on a Chip are using LSI chips to demonstrate!
Expects Q1'98 - revenue flat, earnings flat to slightly up cp. to Q4'97.
Computer Paradigm shift with Dell Inventory Model - expects recovery as a result once everyone has finished copying Dell's model.
Unit Chip Growth strong.
For LSI # of transistors shipped up by 100% (zowie!). Expect to double again in 1998 over 1997. Of course revenue won't go up 100%!!!
Expect supply and demand to approach parity in mid-year. Thus good semi profits expected then esp for 0.25 and 0.35.
High turns business. Customers want suppliers (LSI) to turn around in as little as 3 weeks. LSI takes 6-7 weeks in general for product shipments.
Sony PlayStation - 20 million in 1997. Sees very little inventory accumulation by Sony. Therefore expect further ramp in 1998.
Factory utilization - around 80% in Q4 (may have been 70% not sure). Somewhere around these levels.
DCAM - not much competition (MOT, Fujitsu)
DVD - as mentioned above LSI's chip is awesome.
Overall competitors - IBM, LU.
Turns orders as %ge of revenue - 10-20%
Booking high volume designs and just starting to see initial S-curve turn. Expect significant ramp in H2. Which is expected Gresham launch time. Not a coincidence! Gross Margin l/t - 45% model. But will fluctuate. In 1998 q1 GM improvement, GM detiorates H2 because of Gresham ramp.
More than half of all design wins in digital cameras (zowie! - we guessed right again - LSI is the 800 lb. Gorilla here).
Picking up market share in networking - Intc and CMPQ wins.
40% is now CoreWare. Will get higher.
R&D, SG&A - modest growth expected thru 1998.
LSI moving to next level in SOC - competitors mostly verbal competition (ie., cheap talk)
GSM chip - H2
Depreciation - 200 m in 1998
Exiting 1996 LSI's average designs had 200/250 k gates, exiting 1998 average is now 400 k gates. Because of lag time between design wins and revenues much larger design wins coming on line soon (that explains my bitching about not using the multi million gates on the chips - LSI ahead of the curve)
consumer segment - saw some currency effects.
Cable Modem (:-)) - characterizes current comanies as "flamboyant" (translation : others are big BS) LSI will not be caught up in hype. Figures analog to digital conversion on large scale will take time. (Much as ZOOM indicated - DSL is good) Likely could get in if they want to was my guess. But later.
STB - expects 30% growth in 1998.
SEA (excl. Japan) effect on LSI - big fat zilch. Not worth mentioning was my take on the situation. Certainly some other companies may be affected by slowdown in SEA but not LSI because of high end chips.
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Very interesting c.call. One of the very best in terms of understanding company and semiconductor industry. But the real big revenue gains come later. And still need consumer acceptance of DVD and DCAM. Wilf and gang as usual very accomadating and civil and honest. Good guys. LSI as I suspected all along is so far ahead of the curve that the curve needs to catch up for them to show fantastic gains. But they will come. That looks pretty assured.
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Now you tell me which way the LSI chip goes tomorrow. Current First Call is for 0.26 in Q1. LSI may not meet this. Yet who's left to downgrade the stock? Everyone's mother has it as a hold. And revenue gains look anemic with those famous words "limited visibility". I'm still in wait mode. Any bounce up should come back. Any bounce down is not going down too far. That would be my best guess.
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Sheesh that was long.... (likely some mistakes in above - not a good note taker) |
