Here's how Briefing sees it.....
"...08:55 ET ******
LSI LOGIC (LSI) 32 5/8. This is an excellent example of what is behind most of the problems in the technology sector - prices. Before the open Tuesday, semiconductor company LSI Logic (LSI) reported that first quarter revenues were up 41% from the year-ago quarter. Excellent. But profits fell to $0.08 per share from the year-ago level of $0.22 per share. There is a problem here. LSI revenue has been increasing steadily. This is the fourth straight sequential revenue gain, and the year-over-year increases in quarterly revenue the past four quarters have steadily risen as follows: -1%, 19%, 38%, and now 41%. But profits per share those same past four quarters were $0.23, $0.14, $0.00, and now $0.08. Sharply rising revenue, with falling to stagnant profits. CEO Corrigan, in a press release that makes the obligatory obeisance to the Internet, also says LSI had "record bookings in the first quarter," and that LSI "achieved sequential revenue growth, lowered operating costs, and (the) backlog continued to build. (LSI) clearly has momentum." Yes, but why virtually no profits? Obviously, they sold a lot more product, but not at a price where they can make a lot of money. In fact, Briefing.com feels obligated to note that even thought he reported $0.08 per share profit is three cents ahead of the Wall Street consensus estimate, LSI had to exclude what should be an operating cost - goodwill amortization - in order to accomplish that. But even eight cents a share just isn't much. LSI was the top performing S&P 500 stock in the first quarter, and it has shot up from 10 1/2 in October to over 38 in early April. Because LSI beat the consensus estimate, the stock may benefit short-term. But the market's perception that business has improved substantially is only partly correct so far. With revenue up 41% from year-ago levels, the company should manage more than a slim profit. Extremely competitive price pressures are behind the slowdown in revenue growth at Dell, and are causing problems at other PC companies. This is also clearly a problem at AMD and other semiconductor companies. At some point, the market needs to see that revenue growth also produces profits. These are not Internet companies, where profits are unimportant compared to grabbing market share. LSI ultimately needs to do better than have a year-over-decline of 64% in profits on a year-over-year gain of 41% in revenue, particularly before any new downturn in the industry. Otherwise, all that wonderful improvement in the business will prove an empty exercise...."
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Look to $36 for support if we can get there....
EKS |
