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Technology Stocks : LSI Corporation
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To: Hightechhooper who wrote (13300)6/29/1998 5:49:00 PM
From: DavidG  Read Replies (1) of 25814
 
K,

IMO I think you are looking at this acquisition from a very very narrow point of view. You are stating that the overall growth will drop given that two companies are of different sizes and product mixes. Now this is certainly true and I guess if, after the close of this deal, LSI continued to treat each as two separate companies contributing to the LSI bottom line, then you are certainly right.

But IMHO this is an over simplistic point of view to believe that no synergy exists and given LSI purchased this company for a song, it lowers LSI cost of running the new company and should yield higher returns on it over what HYUNDAI could ever achieve.

To keep it in over-simplistic terms for you. If a cab company buys a new limo for less than half the price of his other limo's he will be showing a higher rate of return on the new limo than the old limo's.
Now if you are trying to imply that LSI bought a mac truck instead of a limo than maybe you might be on to something...but I would disagree with you on that issue also. LSI bought another LIMO CHEAP.PERIOD.

...as a result they added tremendous capacity, new products, and a broader market to expand into, that is similar to their current product line.

...btw I have no problem with you stating your point of views... I am just in total disagreement with your understanding of the fundamentals of this acquisition.

DavidG
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