There is one major difference between running LSI type of business vs Taiwan-type PC business - LSI get to see a lot of contract sales that extends well months into the future vs hand-to-mouth as in Taiwan-type PC business. By now I am sure that management has gotten to see pretty good into Q4. Coupled that to their fab utilization rate of 90%, I give them the benefit of doubt that they know what they are doing in starting up the fab in Q4. If they start fab in Q4, that means production silicon out and sales logged in Q1. Yes, that is kind of a bet six months in advance. But I tend to think that they will win this bet, as long as there is no melt-down in Far East that is.
Conversely, if they do not start that fab, then even if they do not see any general upturn by Jan, they would be totally maxed out in capacity by then with definitely no possibility of sales improvements. I myself tend to believe that they will generate their own climb out of this recession with their new products. If there is any general upturn at all, they will just do that much better. Guess one can make a case of not wanting to touch this stock UNLESS they start that fab.
Anyway, when are we going to see general upturn so LSI can grow 20% to 25% per Q vs only 10% per Q on their own steam? Jan '9? In this case, now is the time to get into the stocks. April '99? Now is not too early. June '99? Now is probably too early. '00, as in never? How would you call this one? Should we wait? Is Far East too scary now, which it is?
patrick
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