Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: DavidG who wrote (13319)	6/30/1998 12:04:00 AM
From: Hightechhooper	Respond to of 25814

David, I think you are right, I have lost my head. If you read the adpt article you will find I am saying many of the same things as the analysts (this is not something I am proud of). Specifically, that competition will work to squeeze margins. If adpt is indeed entering the high end market then they can only take business from one place and that will mean they will have to offer lower prices to do it and symbios (now lsi) will have to meet or beat these prices to keep the business and their customers will make sure both competitors are around to ensure even lower prices in the future. There is no free lunch here. Do you think symbios would have booted their ceo in March if things were all rosey? Do you think adpt will not pursue these higher margin businesses (and as a result, make them lower margin businesses)? I'll say it again, this is not a bad deal but it is not a good deal either. It would have been a good deal for adpt because there was enough duplicity in the cost structures of the two businesses to drive synergy. But LSI bought it for virtually the same price but without the opportunity to reap the same cost savings. They are banking on their ability to grow market share or move these technologies into other areas. This is the type of bet that the acquiring company normally loses and this is why, historically, the stock of the acquiring company will move down on the announcement and the stock of the acquired will move up. Remember the sox was up over 5% last week and lsi was down due to acquisition speculation. You can't now be happy that the price didn't go again on the announcement. Do I want my version of the story to win in the mkt, hell no but it will likely be the one that evolves in the real business results.