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To: Tech Watcher who wrote (13861)	7/24/1998 1:42:00 AM
From: Andy M.	Read Replies (1) \| Respond to of 25814

Does anyone know how much Gresham will increase their overall capacity? I seem to remember hearing that Gresham will increase overall capacity by a significant percentage and that some foundry work will be necessary to fill it. 90% utilization of current capacity is good, but I'm not sure it means that Gresham capacity will be used up quickly. I wish Wilf could have given more convincing visibility on Q4. At one point he said they would see Q4 better in September. They were surprised by the falloff in June, so visibility is a tricky thing. We would be lucky to get any immediate upgrades following that call. At best it seems that some of these guys might quietly accumulate the stock for a while, because it has maybe been beaten down too much--the pre-earnings selloff seemed to foretell a catastrophe and there might be a relief bounce--before doing any upgrading. To my ears, the call had a weird mix of confidence about products and positioning with caution about actual results. We'll see. I actually wish I had some money because buying at these levels seems pretty safe. Andy

To: Tech Watcher who wrote (13861)	7/24/1998 8:25:00 PM
From: Hightechhooper	Read Replies (2) \| Respond to of 25814

Tech watcher, You might want to listen to the call again, you are in for a big surprise if you expect q4 eps above q2. That fab will cost 16M per qtr in dep PLUS the costs of running it including the people (the cost of which are currently being capitalized as startup expenses). Obtaining sequential revenue growth large enough to offset this will be extremely difficult, if not impossible, to obtain in a weak industry environment. Especially when you consider the significant loss in playstation revenue due to the price decrease and the fact that most of the DVD and DCAM revenue will come in Q3 (even though revs will only be flat that qtr) so Q4 will now have to pickup the seasonal drop in the consumer segment PLUS find another 20M+ in revs to cover the burden of Gresham. That ain't gonna happen IMO. My biggest disappointment was the price decline on the playstation. That 16M lost revenue per qtr is what could have kept eps whole despite the fab opening. Without it I just don't see how they can post good eps numbers. Had I known that piece of information earlier I never would have bought this stock when I did. This information should have been provided in the last conf call. LSI knew there was no way they could make analyst estimates of 1.05 with that type of revenue decline per qtr. When you combine this with the lost echostar business that they also knew about I really feel like wilf was extremely misleading during the April call. How will all of this impact the stock price, I have no idea. We are in an era where earnings don't really matter too much so it is very possible that the price could go up despite the fact that eps will likely be moving down. Kurlack may say some positive things to get his clients out or LSI could be perceived as a value play at these levels. But those are the selling points, not the eps growth (or lack thereof). By mid 1999 with dvd, dcam, gsm, cdma, fiberchannel and playstation 2 all hitting full stride things will start moving in a more consistent uptrend. Until then, this stock will trade on everything except fundamentals which is an extremely difficult thing to predict. FWIW, I can now see why it would not be a big deal if lsi lost the playstation mpu business to toshiba because, at these new lower prices, they will get more revenue and gross margin dollars out of the dvd decoder instead. Good luck