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Technology Stocks : LSI Corporation

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To: Moonray who wrote (10541)	3/4/1998 8:24:00 PM
From: shane forbes	Read Replies (2) of 25814

Moonray: I smell a rat here. I doubt PC unit demand is as weak as may be inferred from the release. I suspect instead they're getting hammered with the cheaper PC paradigm thing. It seems too coincidental that with this release they also put out a release about a chip for the cheaper PC market. The sharp reduction of the gross margin (note no product transition thing), the higher expenses all tell me that it may be the "types" of chips being sold that is changing (and hence definitely impacting INTC) and not the "number" of chips (for the industry as a whole). Having said that cheaper PCs do make for tighter profit margins for everyone involved. Thus markets will kill the PC related stocks and the semi related stocks. RE: LSI the lower volume and the lack of interest that we've had in the stock that we've had for the past 4-6 weeks might work against us. Though LSI should theoretically not be hit because of how its business is proceeding (cheaper PC paradigm might affect just the workstation related area) we know it will get hit badly tomorrow - guilt by association. We may likely be hit more on a %basis than INTC - this is one of those "go figure" things! (The low volume could work against us with a few sellers causing the price to get crushed since the buyers might not come in until much lower. ) Worst case maybe a 10% hit - around 2-2.5 bucks or 21.5 - 22? ---- Finally IF INTC is right and demand is down (and Kurlak is right) then TER's lower orders, COHU's falling stock price, weakness in semi-equips etc etc all paint to a very very dark next few months for these stocks. Circa mid 1996. The balloon will be deflating from tomorrow and last for several months IF unit demand is down. Proverbially all bets are off. And even if LSI does remain strong business wise the stock price will go down. Buying opportunity. ---- Shane.

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