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

To: E. Graphs who wrote (15031)	9/16/1998 3:57:00 AM
From: shane forbes	Read Replies (1) \| Respond to of 25814

E: <<< Why don't we ever see LSI kick any butt?>>> E That's gotta be the mother of all questions! If I were to reply in one sentence, it would be: "Too much designing; not enough manufacturing" To embellish that: I use many things to get a feel of a company's technology since I ain't no darn engineer <g>. One of the main ones is the number of design wins since clearly in a digital world with ludicrously short product cycles this is the essential indicator of future business. LSI is the only company that I know of whose design wins keep going up but whose stock keeps going the other way (long term trend). This ain't funny! Or good! <g> The best that I can discern is hat Mr. LSI is not getting an effective return on their engineering design time since either they are either spending too much time designing (the design tool conundrum) or they are designing the wrong things (low volume) or to give them a sliver of hope they are too early with the right methodologies (meaning that the world of digitalization is only just beginning and that the high volume products commence in the years ahead). The key thing to remember with semis is that you have to find a way to fill the fabs! Since this is a CAPITAL INTENSIVE business one has to keep the fabs pumping - if not you have something worth less than a paper weight - an empty or underutilized fab. That is the very goal of the business model! If you don't fill the fab you are schrewed. For instance ADI recently won a big contract from 3Com for modem chipsets. This is big because ADI will now spew out several million chips. So let's see LSI does the Cabletron thing - a few thousand chips (maybe), the Hitachi thing (an exception - could be huge), Cisco (a few thousand really expensive chips presumably)... but nowhere do I see the millions of chips that will keep the fab fires burning. And that's why I got so happy this Jan. when I realized that they were getting the really really high volume chips going (DCAM, DVD etc the usual suspects repeated here ad infinitum) . These fill fabs and mean less idle time for the fabs since presumably you just turn the proverbial switch ON and stand back and produce a million ASSPs. Once this silly Global Economy thing gets resolved I would like to argue that LSI is in the catbird's seat. If you can check out any of the long term trends in the industry - they practically guarantee that what LSI is doing is the way the world will be designing chips a few years out - so much process technology & silicon yet so few designers, experience, libraries or methodology. (Further the markets are definitely there - again the digitalization and connectivity things.) LSI has everything in place to ring up cash registers for the inevitable wave of SOC design but they have to start selling high volume designs (or the high volume designs have to have a market)!!! (Symbios I think helps in this regard since I will bet that many of those chips are very high volume.) For a different take on how the SOC thing should change the world check out book 24 on this bestseller list: www1.clbooks.com <ggg> See we are just a tad early <g> Shane.

To: E. Graphs who wrote (15031)	9/16/1998 4:15:00 AM
From: shane forbes	Read Replies (2) \| Respond to of 25814

E: Re: I always cringe when the press comes out with negative comments on any area.........if it's communications, LSI hangs out with them, so off to jail....if it's consumer electronics, off to jail.........even DRAM and PC related stuff takes LSI down........guilty just cuz. (1) Rational Reason number 1: LSI produces relatively few products (I will hazard a guess - less than 300?) that they are very susceptible to tiny reductions in demand. (By way of contrast I think BBRC does around 250 million in revenue and produces around 1200 parts - LSI does 1,300 million in revenue and produces maybe 250 different kinds of chips (WAG). Which of the 2 is more susceptible in any weakness in any sector? Come to think of it there is another reason - LSI can't get new customers the way a BBRC can say by convincing say a MLIN customer that they have a better substitute for a MLIN chip. See: burr-brown.com ) So basically LSI has a few expensive chips going to a few customers and is schrewed big time if those orders go poof. So they are big time extremely vulnerable. (2)Psyche reason 1: There are very few people who truly think LSI has any shot near term at any given time during any given season in any given year. So if they invest in semis and happen to have LSI in their portfolio at any sign of danger in the overall semi market out goes LSI from their portfolios! Sector rotation out of the weakest stocks first! Same reason why AMAT held on so long when all around them they brethren kept plummeting (I bet some of the people who sold the weaker semi-equips did not sell AMAT. But I bet if there was a sign of trouble someone who had say LRCX and AMAT in their portfolio at the same time would without a doubt pull the trigger on LRCX first. My sense is the same thing happens for LSI in any semi portfolio.) (3) Psyche big picture Disgust Reason: LSI has a lot of promise but no earnings to show for it and enough of people have learnt that by now and so look to dispense with their LSI position post haste... (4) Cynical picture: No one understands what the company does! and could care less since the stock just keeps going backwards <g> As to "the coma or the slipping into one" effect - that must be the excessive Sangria up there in California. <g> As to "BBRC has a great reputation around here" I for one am not at all surprised. They show all the earmarks of a quality outfit - in many ways they remind me of a smaller Analog Devices awhile back. Kudos to them! Shane.