Patrick: In a perfect world, Gresham will open just as LSI needs additional capacity, just as the semi market is making its next major upturn. Given the ongoing slump, it is real clear that it ain't going to happen. However, if LSI misses by a quarter hitting this perfect sweet spot, then it will mean very little. I am not trading this stock, and I have no intention of divesting of it within the next two years at the least, so it doesn't concern me long term. Paying 20% on my capital gains is a very enticing prospect.
None of "today's" bad news diminishes the very realistic scenario for explosive price appreciation in the near future. By the end of '99 all depreciation on Gresham will have been expensed, the semi market will most likely be in a strong upturn, LSI consumer products will have started a strong upswing, the networking will continue to grow, Symbios will have become fully integrated, growth opportunities in other areas of the stock market will have lessened, Xeon will have made major inroads into the server market, Fibre Channel will have begun to show real numbers, consolidation will have occurred in the semi market, greater visibility as to the potential of widening the pipe via wireless will be known, and the high end intellectual property of LSI will have grown. In short, at some point within the near future, LSI will show explosive year over year numbers-the sort of numbers that will command very high multiples going forward for the year 2000. I think an investor needs to ask himself as to what is the probability of this earnings scenario. I believe over 80%. When is price appreciation greatest? Just before this growth occurs.
Is it my trade of the day? Not in a million years. |
