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To: Richie who wrote (34525)	10/12/1998 7:54:00 AM
From: Elwood P. Dowd	Read Replies (1) \| Respond to of 97611

Intel thrives, LSI looks to layoffs By Michael Kanellos Staff Writer, CNET News.com October 12, 1998, 4:00 a.m. PT A good news/bad news scenario will likely play itself out this week in earnings announcements from semiconductor companies. On the positive side, Intel is expected to report revenues in excess of the projections the company released last month, according to some analysts. Accordingly, the company is expected to report earnings of 80 cents a share or more. Intel reports tomorrow. Meanwhile, LSI Logic may announce layoffs when it reports its third quarter results on the morning of October 14. Sources close to the company and analysts have said that the company could announce a layoff effort to streamline operations due to a slump in sales. LSI makes chips for communication devices and set-top boxes. The upswing in Intel's business largely derives from steady sales in the PC industry for the third quarter. A PC glut in the first half suppressed sales. But that vanished by the middle of the summer, clearing the path for processor sales. In September, Intel revised its revenue outlook and said that sales would be 8 to 10 percent higher in the second quarter. Before that, the company predicted flat revenue. Now, analysts believe that revenues could jump 12 to 13 percent beyond the second quarter results. Accordingly, predictions for earnings have risen as well. "Earnings per share will be in the low to mid 80s," said Dan Niles, an analyst with BancBoston Robertson Stephens. Revenue, he added, would come in at around 12 to 13 percent higher than second quarter revenues of $5.9 billion. Twenty five analysts have raised their estimates upward in the past month in the wake of the company's September 11 announcement, according to First Call. The consensus estimate for earnings is now 80 cents a share. Earlier, it was in the 70-cent range. Although that figure would be a decrease from a year ago, when Intel posted a profit of 88 cents a share, it will mark an improvement over earnings per share of 66 cents in the second quarter. Ashok Kumar, an analyst with Piper Jaffray pegged earnings at 84 cents a share. LSI, however, faces a different fate. In August, LSI warned investors that revenues would be five to 10 percent lower than the revenue for the second quarter while earnings per share would decline from 23 cents per share for the second quarter to the low to mid-teens. The company cited the slowdown in worldwide semiconductor demand as the cause of the decline. "We expect supply and demand to come together in the next 12 months," said CEO Wilf Corrigan in a prepared statement. A consensus of analysts on First Call pegged LSI's earnings per share at 13 cents a share. "They will go (discuss) some long-term plans for the next four to six quarters," on the conference call, predicted Niles. "Part of that will relate to getting operations to be more profitable." Niles stated that he did not have information on any exact layoff plans of LSI but said there is a likelihood that streamlining will occur. LSI has increased its research and administrative budgets in recent quarters, but has not experienced a revenue boost to justify the spending. "They are not getting the revenue growth to support that," he said. "Expenses definitely have ballooned up." Niles predicted that the company would report 14 cents per share in earnings and revenues close to $300 million. "The semiconductor industry is hurting in general," said Richard Belgard, an independent processor consultant.