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Technology Stocks : LSI Corporation -- Ignore unavailable to you. Want to Upgrade?

To: Bob Howarth who wrote (21238)	1/26/2000 10:03:00 AM
From: Ram Seetharaman	Read Replies (1) \| Respond to of 25814

Wednesday January 26, 9:43 am Eastern Time Alert: Lehman Ups Lsi Logic Price Target to $125 From $77 (NYSE:LSI)

To: Bob Howarth who wrote (21238)	1/27/2000 12:31:00 PM
From: Jock Hutchinson	Read Replies (1) \| Respond to of 25814

Bob: 1. The earnings BGW uses a lower tax rate than GAAP but LSI told the analyst to ask what the difference was 'off-line'. The point of the conversation was that because all of the GAAP gains were taken in the US, the taxes were higher. Breaking that sort of stuff down is quite often done offline in many simply CCs simply because the CFO is under a legal obligation to be utterly precise in said circumstances. I don't think that any chicanery was involved. Indeed, unlike INTC, LSI did not add the one-time gain to its bottom line. 2. The 14% of legacy revenue that becomes 3%. How profitable was that revenue compared with other stuff being produced? Was there a single big product piece here that goes away? The revenue from the legacy products is primarily gate array. A lot of it was military business that they could not get rid of. I think Wilf's comment that it was business that they are "thrusting" into the hands of the FPGA guys says it all. By the way, Wilf doesn't have a lot of respect for the FPGA game. Over the next five years, it will be a most interesting scenario unfolding as LSI with its embedded FPGA functionality competes with the ALTRs and the XLNXs. I for one wouldn't be caught dead in those two or VTSS, isnce my feeling is that their collective times have come and are about to pass. I was surprised that SUNW was 11% or so of revenues, with no communications products. LSI longs better hope SUNW growth doesn't slow as this will hit LSI. What can be said about SUNW can be said about all of LSIs customers. The difference is that SUNW has the most complex ASIC chips that LSI makes. As a result, the SUNW business is among the most secure, given LSI superb reputation as a manufacturer. 4. I liked the older way they divided up the company rather than the new. For example, you could ascribe lower margins to concumer and higher to COMMS in old system. Now you can't tell whether a product like wireless handset is priced with consumer margins or not. So did I. And I am not sure as to why it was done 5. I was surprised that Wilfs 3000 YEN target price of PS2, as well as the embedded DVD player in PS2, was not discussed a bit more. I thought the key point that Wilf made is that one is going to get an Internet appliance, DVD, and first rate game machine all roled into one at a very reasonable price. Sony sold 19 million PSIs last year, and it is reasonable to assume that in the second year, that LSI will be provding something on the order of 20 million chips. Thus, this promises to be an outstanding revenue source. Good