Shane has it right with his cavalier attitude toward this past quarter and the next couple of quarters. Nobody really cares that much about 4Q if LSI misses its numbers by a few pennies because Gresham came on line one quarter too soon. I sure don't care. The only reason Gresham will have come on line too soon is because the slowdown in chips lasted a little longer than all of the experts thought it would when they were making their predictions a year ago. Thus, one can give some credit to the squirrels for finding this particular acorn.
In part I agree with your assessment with LSI not yet having found its identity. They really haven't really hit their stride yet with their Coreware product line--at least to the extent that they ultimately hope to reach. But Grand Poobah or Tony Viola had an interesting comment about LSI in an upturn. He said that during an upturn in the semi cycle, LSI would benefit much more than the PLD guys simply because potential customers would be much more likely to want to spend the additional bucks for the sort of hard wiring products that LSI offers rather than the PLDs simply because there would be more product to be sold and also the need for greater differentiation among competitors.
Part of the problem with LSI's lack of respect from the Street has been the number of times the Street has been burned during the past three years. As you know going into the Fall of '95 LSI had returned over 1400% to its investors in just three years, and it really had begun to hype the concept of System On a Chip, which afforded it a high multiple. The Street has bought into System On a Chip three times in the past three years and been burned big time all three times. As a consequence, it has become for the time being a show me stock. Worse yet, management has actually been choosy at times as to what business it would accept.
But what intrigues me is the confluence of events that could prompt LSI to have an absolutely explosive three month appreciation in its stock price sometime in the near future. It seems like it will all come together simultaneously: Upturn in the semi cycle; new modular plant to handle increased capacity; major introduction of new product cycles in three of their four major product segments including storage, consumers, and telecommunications to go along with its booming networking business.
I took my first major position in LSI this time around in late January at 23. By January 2000, I will be sorely disappointed if I haven't at least doubled my money. I suppose my timing was poor since, right now my position in LSI is a loser, but no one has ever been able to time the semi market perfectly. What am I supposed to do now? Make a big play in Yahoo or Dell? No chance. This is where the fresh money will go sooner rather than later. |
