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Technology Stocks : LSI Corporation

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To: Tony D. who wrote (12349)	5/15/1998 4:04:00 AM
From: Duane L. Olson	Read Replies (1) of 25814

Tony.. My thanks as well. The Wizard should appreciate your explanation of why margins have not improved despite the fact that fabs are nearing capacity. Your report: "He was asked why their revenues (earnings) were down with the fab's nearing capacity as compared to last year with the fab's at 75%. He responded that the work currently in the fab's was booked last year at lower rates (margins) just to keep them operating. He agreed that one does not normally want to book low margin business but they took what they had to. He feels that this "keep busy" work would soon make it through the cycle leaving room for higher margin work." This really pleased me to know, as the Wiz and I could not account for the lack of profits the last couple of quarters if the fabs were running near full out. If those contracts are coming to an end, truly, stand back! -- the guesses about next year's earnings could be very much on the low side, IMHO. Thanks again for adding to Michael's excellent reports.. TSO

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