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Strategies & Market Trends : Z Best Place to Talk Stocks

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To: Larry S. who wrote (16176)	9/6/1998 5:46:00 PM
From: DanZ	Read Replies (2) of 53068

LSI, VLSI. Larry, These two companies did announce that revenue would be 5% to 10% below last quarter. Is that good? NO. But it's not that damned catastrophic either, especially considering the state of the semiconductor industry right now. VLSI will still do about $130 million in revenue this quarter but investors are treating both companies as if they are going out of business. VLSI is trading at nearly 50% of it's book value. This is despite the fact that the CFO said that their property is worth about $1 per share more than is being carried on the books. Yes, inventory and fabs can be worth less than are carried on the books, but still, these are both ongoing concerns that are trading as if any future earnings are worthless. So while you are correct about their reporting negative revenue growth, these stocks are not going to 0. Where they find support is anybody's guess, but as you noted, they are well oversold and the indicators would suggest to me that both are ripe for a countertrend rally. Semiconductor sales are slowing but they aren't coming to a grinding halt. One day sales will start growing again and I think these two stocks have over-reacted. LSI news: lsilogic.com Dan

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