Getgo,
I believe your comments are very insightful and the heart of the issue for LSI. Yes, they have some major operational hurdles to overcome in the next few qtrs (bringing Gresham online, symbios integration, finding new customers for their series of new standard products and pushing R&D to stay a step ahead of the competition which is increasing daily). I do believe that they will overcome these hurdles sufficiently but they will likely not end up 3 standard deviations to the right of the mean like most of the mega bulls believe.
To the extent stock price is meant to reflect future expectations, the issue therefore becomes convincing people that they can at least partially succeed with these issues. The stock price clearly does not assume that now (in fact it assumes they will be quite unsuccessful, which is a joke). In the end people determine stock valuations, not formulas so if LSI management could market its current successes and the potential for its future successes even a little more effectively all shareholders would be the beneficiaries.
I completely underestimated the hole that LSI dug for itself last October and it looks to me like management has given up trying to sell the company until they have results in hand. That should not have been the lesson that they took from last october, they should have learned that when business is not developing as planned you have to start getting information out early and actually increase the level of communication with the outside world when things aren't going well in order to be perceived as trustworthy and for people to feel compassion for you. As a result, if some analyst thinks you're a good guy they are going to support you. If you are arrogant, condescending and always act like you are hiding something (my perception of LSI as well as the perception of several analysts with whom I have spoke) then they will not support you when you need it most. I have yet to see any change in LSI's behavior to indicate that the right lessons were learned last october. Until they can take a deep inward look at themselves and realize it is not WHAT they said that got them into trouble but HOW they said it and how they ACTED when their beliefs didn't materialize the company's valuation will continue to suffer. Again, I blame myself for not realizing just how deep the hole was and for not realizing that they didn't learn the right lessons (I guess I wanted to believe everything was getting better) but I also blame management for not focussing on improving this important part of being a public company. I hope I am pleasantly surprised on Thursday, but given the trading pattern that looks like a low probablility event right now |
