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Technology Stocks : LSI Corporation
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To: patrick tang who wrote (14134)8/10/1998 7:50:00 PM
From: Hightechhooper  Read Replies (2) of 25814
 
Patrick,

The impact of Gresham is not limited to the incremental $16M in depreciation. You have to add another 10-15M per qtr for the cost of the people who will work there and the other operating expenses of the facility. Currently this is being capitalized as start-up expenses. It is the combination of these expenses (about 25-30M per qtr) that will drive the gross margin into the low 40's for Q4 and beyond. It has been a long time since LSI has had revenue growth of this magnitude, so look for eps to fall after Q3.

I still suggest getting out on any hype rally and then buying back at lower prices. You missed one hype rally already last week and you may not get another chance for a while given current asian concerns.

good luck,
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