Getgo,
regarding <<What the heck is the problem here ?>>
It would seem that you and I are the only two that perceive a problem, but my view is that LSI has separated the running of the business from the management of the stock price. They have chosen to focus on one and ASSume the other will take care of itself.
When they have tried to do something to support the stock it is done through the analysts, which is a fundamental error in and of itself (just ask Kurlack) because the information is not accurately, broadly or consistently communicated to the entire investment community OR they have some little article with a quote from Wilf that says business is still good (but even that is screwed up because it says the weak yen will cause EARNINGS to be DOWN but REVENUES will be flat, when it really should say reveneus will be down due to the weak yen but earnings will be OK due to the natural hedge on the cost of sales side).
In order for the message to be effectively communicated it must be clear, accessible to the investment community at large and be CONSTANTLY delivered and reinforced. And you will only do these things if you believe that marketting the companies stock is part of the responsiblilites of the company and is not something that should be left entirely to market forces. LSI's actions indicate to me that they do not believe this is part of their responsibilities. They made the mistake of not communicating enough in 1997 when the business did not grow the way they thought it would and the stock got massacred because of it (being wrong about the recovery would have been an ok thing if they would have come clean much sooner than they did, then they wouldn't have lost so much respect). Now they are gun shy and the result is they are not communicating again because they are afraid of being wrong again. Unfortunately, their solution is part of the problem and until they realize that, the stock will be left to drift with the market forces, rightly or wrongly.
Sadly, they don't even care because they don't view this as a critical part of their responsibilities and they don't believe it is under their control. If they don't take this issue seriously soon, they will begin to lose the engineering talent that is the driving force of the company's success because the stock options will not be valuable enough to keep these people around. It is a vicious cycle, you need good engineers to develop good products so the business can floorish, but you also need good compensation programs so that you keep the people that allow this cycle to begin anew. In todays day and age you cannot keep good talent without a strong stock. If that is not incentive enough for LSI to more actively market the stock to the investment community, than nothing is.....
That is my answer to your question, but many around here don't seem to agree. |
