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

To: Tony Viola who wrote (9459)	2/4/1998 9:19:00 PM
From: Jock Hutchinson	Respond to of 25814

Announcing a brand new contest with an actual prize! --Not just that Tony, but you have to stick with a disciplined style that works for you and not change horses in midstream. If you are going to be a trader, then be a trader. If a long term investor, then be a long term investor. Do not mix disciplines. The genius of Mr. Soros is that he delegates enormous authority to his minions who have expertise in a particular field and then takes action. By contrast, Mr. Buffett works with a different philosophy. By the way, as long as we are on or near the subject of analysts, I have to respectfully disagree with certain members of this board. Their philosophy is that one should buy when an analyst says sell (i.e.hold) and sell when an analyst says strong buy. That is pure nonsense. You don't have to ask me, you can look at Ben Zacks incredible track record. His system is based exclusively on analysts' upgrades and downgrades of earnings. However, having said that, semis present an enormous problem to predict for two reasons. First semis as we have found out all too painfully, are a leading indicator, And we are about to see just how much a leading indicator this year, as semis may be up in a down market. Because they are leading indicators, there is enormous speculation and buying in anticipation of moves in the group's earnings. This buying doesn't manifest itself at the first sign of a good earnings announcement. It begins even in advance of ramp ups. Clearly, last year we saw just such a case with LSI--no doubt helped by Wilf's public appearances on CNBC. Similarly, you can have record earnings and sales, and the stock can go into free fall-witness the last quarter of '95, when LSI took a 70 percent haircut.Now we add another problem to the mix. Most companies that have ordered chips have learned their lessons in dealing with expensive and overwhelming inventory and have adopted The Dell model which dramatically cuts the ordering time and backlog. Kurlak referred to this in his recent lowering of his earnings estimate. Tangentially, the analyst at Lehman also referred to the lack of visibility on certain forward looking LSI projects as Fibre Channel, DVD, digital camera, etc. Yet he maintained his buy rating, noting that the stock had excellent long term potential. And while analysts are not paid to deliberately deceive their customers, they are paid to not miss by a lot. That's the kiss of death. It's similar to what Dipy said when he referred to the pain of losing fifty percent being much more than gaining fifty percent. With this in mind, analysts can know that a stock such as LSI is enormously undervalued relative to its potential five years out, but they also know that LSI has not delivered in the past three years as promised. It's just not that easy to predict these things--witness the problems with a DVD standard. To finally illustrate the point, LSI bought a ton of their own stock about six weeks before it crashed in October. Paradigmatic shifts take place that fast. Although I am a newcomer to this board let me propose something that will heighten the perceptions of the long term players on this board and illustrate my point. I feel this is especially appropriate given the sleek lions recent win over 'da mangy bears. The winner gets his/her choice of one Sony Playstation "video". Here's the contest. Equal weighting will be given to each of the following categories with the results ranked in numerical order. On the close of the market on Monday March 1 1999 ( more than a year from now, the four questions are: What will LSI's stock price be? What will be the announced earnings for '98? What will be the analysts' estimated earnings for 1999? What will be the analyst's anticipated earnings for 2000? The estimates used will be from the March 1 edition of Zacks. I think you will see enormous differences of opinion, but the one factor that I think will weigh in the most in a success is the most informed opinion. Entries will be taken until March 15, 1998, and in the event of a tie, a coin flip will decide. The reason I joined SI, was because I wanted to contribute and learn from meaningful discussion, since I trade in and invest in this enigma. I'd really like to see more meaningful exchanges of opinions about their products. For example, I find it fascinating to go to the fibre board. Having said that, I will just about guarantee this. Shane Forbes will beat out Kurlak by a long shot Tommy K, you are more than welcome to apply. According to Cramer, you are the best on the street. For that matter, I welcome the participation of the wild man of Wall Street. Hope I am not breaking any SI rules. Good luck and most importantly, good health to all. Jock Hutchinson PS. Please make sure you send me a private message as well as posting so I don't miss anything, and please provide some reason for your estimates. PSS. Which Jordan? The media maven or the teammate of ODDMAN?