My favorite link of the day:
go2net.newsalert.com
My favorite quote from this link:
--
Dr. Kanz noted, "Historically, the industry overbuilds during a boom, leading to a bust, and then underbuilds during the bust, driving it into the next building boom. The time to start planning new facilities and capacity is at the bottom of the downturn. That avoids running short of capacity during the upturn and incurring sizable opportunity costs from not having sufficient capacity, and hence losing market share, when prices and profits peak."
--
LSI not only survived this latest downturn, but was strong enough financially and had enough vision to:
1) Continue to invest heavily in R&D. I can't think of anyone better poised with the right mix of technology to thrive in the coming 6 to 12 months.
2) Purchase Symbios at fire-sale prices. Seagate purchased Conner for too much during an industry peak and is still suffering for it. 3Com did the same with U.S. Robotics and they are severely lagging their industry. The cash-starved Koreans gave up their diamond in the rough just as it was ready to hit stride. The added revenue should put LSI at the critical mass of size necessary to grab the attention of the big money managers.
3) Gresham. I'm not convinced LSI management is really that good. They have managed their current resources to the tune of 90% capacity, and now have another facility coming on-line just as it is needed in the early stages of an industry upturn. With the lead-time necessary for a project of this size, it is uncanny how well timed it actually is. Even if they take on some lesser-margin business for a few quarters to fully utilize it, it is nice to know it is there when volume hits on the high-margin items.
I'm not as bullish on the long-term future of LSI as you might think. I am yet to be convinced that they can execute a long-term business plan. They still appear to be a company in search of an identity. They still get no respect from the investment community. Even a blind squirrel finds an acorn once in awhile. However they got here, be it managerial brilliance or blind luck, they appear to have most of the pieces of the puzzle in place. They couldn't screw-up the next 6 to 9 months if they tried. I will only hold LSI for the next 3 to 6 months and fully expect to sell somewhere between $32 and $40. It wouldn't surprise me if LSI would hit $60 to $75 within 24 months, so don't worry - I'll leave plenty on the table for the rest of you.:-)
- Tech Watcher |
