Here's the item about "military strength" of the Playstation2 I mentioned (apparently it shouldn't affect sales). PS2 is more powerful than a Cray of only a few years ago! And LSI's right in there!
-- Shares of Sony Corp. (SNE: news, msgs) dived 1,430 yen, or 10.8 percent, to 11,850. Local media reported Sunday that Sony's new PlayStation2 video-game consoles contain technologies similar to those found in missile guidance systems. Given the potential military applications and the price of the machines, special licenses are reportedly needed before they can be exported.
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So this is evidence of re-defining you mention.
You make a good new economy case for the bright future, the big picture it's essential to keep in mind, IMO.
LSI as a parts supplier to the hottest parts of the new economy can grow even faster than their customers. And their innovation and product line is incredible, and makes it a real pleasure to be part of as an investor.
However, IMO valuation levels and competition have got to be important (I don't necessarily mean LSI yet), as seen in market history, and I've seen it in the last few years too.
eg. The stars of yesteryear: 3-4 years ago cisco was king of networks and routers, and forecast 30-50% growth, and the whole sector was valued at the peak on achieving that growth. Now we see that Cisco was actually king of the enterprise, which is only a fraction of telcom $$ being fought for now. The headlines in networking 3 years ago were about 3com being the #2 networker -- now they're divesting networking. Fore, Ascend, Cascade, Newbridge, DEC, UB, Bay, Cabletron, Ipsilon, etc, have mostly been bought out by what many considered as old economy telco companies, many bought out well off their highs, and many have disappointed the high expectations at the peak, although many investors did well. So arguably Cisco alone has lived up to the hype at the peak. Although Ascend and Bay did OK in telcos, as many of the others were commoditized. I bet some "kid analysts" people follow don't even know these names now, that were so prominent not long ago. The networking industry grows on though, unlike disk drives, PCs, and floppy disk industries.
(Ipsilon was supposed to be a disruptive technology (ASIC based) that would challenge cisco, it was quickly copied, and not long later they agreed to be bought out by a European cell phone company)
Also, 3-4 years ago we were supposedly in a new age. The Dow age and goldilocks economy where you supposedly couldn't go wrong if only you bought blue chips Coke, Gillete, Citicorp, which unlike small caps had the reliable earnings estimates that institutions love, and would grow unlimitedly expanding in the developing third world, China, Latin America according to the market gurus. In one of the biggest market runs of all time -- just when the chart went exponential and everyone was buying -- they reached values that have gone nowhere since. So these endlessly hyped stocks turned out to be underperformers. That age is already forgotten (for now anyway) and the crowd's rushing into new things.
So I'm a little sceptical about new ages. But I must be a techno believer because I still have about 70-80% in tech shares. But, before the correction, I think most of the tech high flyers might be in the same boat now as the Dow was then even if the companies do well. But the NASDAQ now has way more companies involved and emerging than the Dow did then, so hopefully I have an edge to pick the stocks to power on in that bright future!
Anyway, again good luck with LSI, they should do well in the next couple of years, I hope the stock does, I already miss them and feel like buying them back. Got to go now, turning into a mouse-potato(eom) |
