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

To: BWAC who wrote (14395)	8/19/1998 5:53:00 PM
From: Yamakita	Read Replies (1) \| Respond to of 25814

Hi folks, I'm thinking of buying some 2001 leaps, the price of which underwent a dramatic shaving yesterday. I'm finding it hard to swallow that we'll be at these same levels 2.5 years from now. The margin of safety appears pretty good at this point.

To: BWAC who wrote (14395)	8/19/1998 6:00:00 PM
From: Moonray	Respond to of 25814

More: LSI Logic Shares Plunge 14% After Earnings Warning Bloomberg News - August 19, 1998, 1:56 p.m. PT LSI Logic Shares Plunge 14% After Earnings Warning Milpitas, California, Aug. 19 (Bloomberg) -- LSI Logic Corp. shares fell 14 percent to a 52-week low after the specialty-chip maker said third-quarter profit will be short of analysts' estimates on a ''major shortfall'' of orders from U.S. customers. LSI fell 2 5/8 to 15 5/8, the lowest level in nearly two years, in trading of 6.1 million, more than twice the three-month average. The company gets about a third of its revenue from sales of chips used in telecommunications and networking equipment. Customers include Cisco Systems Inc., 3Com Corp., Bay Networks Inc. and Cabletron Systems Inc. LSI has been hit hard as spending on communications equipment in Asia falls as the economic crisis there worsens, especially in Japan. ''This industry in not ready for a turnaround yet,'' said Terry Ragsdale, an analyst with J.P. Morgan Securities who rates LSI ''market perform.'' The Milpitas, California-based company said it expects revenue to fall 5 to 10 percent from $330.1 million it reported in the second quarter, and per-share earnings to be in the ''low to mid teens.'' LSI was expected to earn 23 cents a share, based on a survey by First Call Corp. Today's warning is the second time in a month that LSI warned investors about earnings. When it reported second-quarter results in July, it told analysts third-quarter revenue and earnings per share will be unchanged from a year earlier. On a conference call with analysts, LSI Chief Executive Wilfred Corrigan said the company is seeing a ''secondary Asian effect'' as its U.S. customers sell less equipment there. ''Asia has not hit bottom and will keep going down another couple of quarters,'' Corrigan told analysts. No Help From PCs LSI also has been hurt by the fall of the yen against the dollar because the company makes some of its equipment in Japan and bills U.S. customers for those products in the Japanese currency, Corrigan said. A weaker yen means goods billed in that currency are worth less than the same goods billed in U.S. dollars. The dollar has gained 15 percent against the yen since March. The company also is facing more competition from larger rivals like Lucent Technologies Inc. in the market for application specific integrated circuits, or ASICs, used by networking companies, said Clark Westmont, an analyst with NationsBanc Montgomery Securities LLC who rates LSI stock ''hold.'' Because the company gets little revenue from sales of chips used in personal computers, it won't benefit from an expected second-half rebound in PC demand, Westmont said. ''They get very little benefit from improvements in that market,'' he said. LSI earned $32 million, or 23 cents a diluted share, in the second quarter. Analyst Downgrade Also today, Merrill Lynch analyst Thomas Kurlak downgraded LSI to ''neutral'' from ''accumulate,'' citing the shortfall in U.S. orders, the decline in the Yen and concerns over the Symbios purchase, which he said would dilute LSI's earnings. Kurlak, who upgraded the stock June 4, said in a report the decision to buy Symbios ''may be poorly timed'' because of a slowdown in the market for Symbios' computer chips, used in expensive computer servers. Its third-quarter outlook doesn't include any charges for the $760 million cash purchase of the Symbios unit of Hyundai Electronics America and doesn't include any results of Symbios. LSI expects to complete that transaction in the quarter. LSI, like National Semiconductor Corp., has been pushing hard to develop system-on-a-chip technology, which combines the functions of numerous chips onto fewer ones, saving LSI's customers money and time in getting products to market. o~~~ O