Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Tony Viola who wrote (16521)	1/22/1999 9:42:00 PM
From: Alain Dubreuil	Read Replies (3) \| Respond to of 25814

Comments from Value Line LSI Logic should make a partial earnings recovery in 1999. The semiconductor market appears to be improving more quickly than we had expected, especially in the custom chip segment, where LSI specializes. Order patterns have accelerated, and demand appears to be picking up in many of the company's biggest end markets (telecoms, PCs, and consumer electronics). LSI products for high growth areas, such as DVDs, digital cameras, and set-top boxes, are selling well and should contribute more substantially through this year and beyond. The pricing picture looks better, too, especially in the Pacific region where the yen has strengthened substantially. Although the near term is still somewhat uncertain, we think the top line will continue to improve going forward, based on current trends. Recent cost reduction efforts should gradually widen margins. LSI has made significant cuts to its workforce and closed two of its older manufacturing plants. The facility in Gresham, Oregon, a more efficient operation, will take on the additional load as it reaches full production this quarter. Also, in association with the Symbios purchase, the company shut down several design centers, sales offices, and redundant administrative functions. These steps should bring LSI closer to its targeted business model by the second half of 1999 and, together with the fully operational Gresham plant, help support better earnings growth through year end. LSI's specialty niche should give it a long-term edge over the competition. Most of its products are custom single-chip designs, which offer considerable cost savings to its customers, especially those in the higher growth markets that LSI has targeted. The addition of Symbios significantly strengthens LSI's exposure to the fast growing high-end storage market (to about 30% of revenues, up from 5%). Rapid expansion of communications networks means that these products will likely be in very high demand for some time. Neutrally ranked LSI Logic stock's wide 3- to 5-year capital-appreciation potential should appeal to aggressive investors. Warren Thorpe January 22, 1999 Alain