Let me think about this. If LSI reported $457 million in sales for Q1, and it is comfortable with a six percent increase in revenue for the upcoming quarter, by what percentage would its revenue need to grow each quarter to reach the "average" of $2.1 billion.
Well here we go now with special thanks to Ms. Van Der Bosch, my Kindergarten teacher at Park View School in Morton Grove, Illinois.
Start with a base of $457 million and multiply it times 1.09 (nine percent growth, which is above LSI's comfortable figure of 1.06, but who am I to accept LSI's word), and you get $498 million. Multiply that by 1.09, and you get $542 million. Multiply that by 1.09, and you get $644 million. Add them together and you get a little over $2.1 billion for the year. In other words, LSI needs to grow at an annualized rate of almost 35% a year just to have an "average" year, when the anticipated average for the industry is 15 percent. Now to my mind, that means that LSI will have to double the industry average to have an "average" year.
True, I missed a few million from SEEQ, but I'm being irresponsible. I am not saying that LSI won't hit these numbers, but if it does, it will take a remarkable confluence of events that will clearly not be "average".
There is also a dark cloud hanging overhead with respect to both networking specifically and Y2K. LSI has acknowledged that there may be a slowdown in networking later in the year, and that inventory adjustments may be being made in response to Y2K fears.
For the record, I feel that LSI will have an above average year, and will ourperform the industry. I also think that they will have a great year in '00 as product cycles in the consumer industry really take hold.
We shall see. |
