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

To: patrick tang who wrote (13600)	7/16/1998 2:24:00 PM
From: Hightechhooper	Read Replies (1) \| Respond to of 25814

Patrick, LSI has said that they aren't doing any foundry work because it doesn't fit their business model and they are just not good at it. I believe it is too late to sign up anyone in the nearterm anyway. They did write some lower margin contracts about 1 year ago to help fill existing and future capacity. Right now I believe that this "extra" work is coming close to filling existing capacity. However, Gresham will open with 1K 8in wafer per week capacity, nearly a 20% increase vs existing capacity. This means they need significant growth over and above this "extra" low margin business to even come close to utilizing this new capacity. As a result, they are over a barrel because this means they need DVD, DCAM, GSM standard products and the 2nd generation playstation to really take off. Unfortunately GSM and sony 2 are both 1999 products so it is up to dvd and dcam in Q4 and their base business must continue its high order pattern (which seems to be counter to what many are seeing, even outside the pc area) in order to utilize the capacity and avoid an earnings meltdown. I believe they need at least 375M per qtr in revs to make the transition happen smoothly. In the shortrun, this is the corner they have painted themselves into. There is no way out except to have the business be strong and have dvd and dcam deliver on expectations. That is the fear running through the stock right now and no news is bad news to the investment community. This uncertainty breeds fear and induces selling. It is this uncertainty that LSI has not managed well IMO.