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

To: E_K_S who wrote (25272)	10/2/2002 8:16:25 PM
From: sea_biscuit	Respond to of 25814

Well, auto sales have been solid too. But nothing's getting through to the bottom-line. Almost nobody seems to have any pricing power -- be it computer makers or cereal manufacturers. The specter of deflation hangs in the air. Very scary.

To: E_K_S who wrote (25272)	10/2/2002 10:40:45 PM
From: Andy M.	Read Replies (2) \| Respond to of 25814

Keep the reality coming, Eric. Thanks. Andy

To: E_K_S who wrote (25272)	10/3/2002 1:39:13 PM
From: E_K_S	Read Replies (1) \| Respond to of 25814

Hitachi, Mitsubishi to merge chip businesses in “Renesas” venture (http://www.commsdesign.com/news/market_news/OEG20021003S0006) By Peter Clarke Semiconductor Business News October 3, 2002 (6:15 a.m. EST) From the article:"... TOKYO -- Two of Japan's largest chip makers, Hitachi Ltd. and Mitsubishi Electric Corp. have agreed to merge their chip operations -- excluding DRAM memories -- into a new $7 billion semiconductor company to be called Renesas Technology Corp. Hitachi is expected to own 55% of Renesas with Mitsubishi holding 45%...." "... The companies said the move was an attempt to address the increasingly short development cycles required for semiconductor chips, something particularly true in the personal computer and mobile phone handset markets..." This may be in response to LSI's RapidChip (http://www.forbes.com/technology/newswire/2002/09/04/rtr711590.html) announcement on September 4, 2002. RapidChip could halve the time to around six months that it takes for electronics makers to design chips with new features into customized products. From the article: "...The companies said that they believed Renesas could become the world's top supplier of 'System LSI' chips. System LSI is a Japanese term roughly akin to System-on-Chip. The companies said Renesas would aim for the leading position in the mobile, network, automotive, and digital home electronics applications...." ========================================================== This is not any surprise to the market as this joint venture was announced March 18, 2002 and according to the article Renesas will only be "established" by April 2003 and no time line was mentioned as to when their combined production will be shipping new product under this JV. Also, as a footnote, there is currently excess manufacturing capacity in the industry. However, (at least for this next cycle), LSI's management has structured their production model to take advantage of several long term outsourcing manufacturing contracts. This should allow LSI to scale up production without having to add any new additional "owned" capacity. ========================================================== If you are bullish on the company, this could be a good buying opportunity. It appears that the market is discounting for the worst possible outcome, perhaps anticipating little or no recovery for 2003. I will be watching the free flow cash numbers over the next few quarters to see if LSI is tapping their cash reserves. If the company's new diversified product lines can generate sufficient revenues to maintain "positive" cash flow from operations, then LSI can wait out any prolong downturn. The key to a good investment is to (1) accumulate your position closer to the lows than the highs and (2) be correct on your long term outlook for the industry. With hindsight it is pretty easy. Looking forward it is a bit more difficult. FWIW, the low on the previous semi-cycle was Oct. 11, 1998 around $5.50/share split adjusted. EKS