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

To: uu who wrote (16724)	1/29/1999 10:39:00 AM
From: Jock Hutchinson	Read Replies (3) \| Respond to of 25814

Addi: Here is what I like from the CC. Wilf and Doug Norbe are saying that by 4Q of this year, we will see margins that are returning to normal. Wilf is also saying that the industry may grow at 20%, and this is beginning to look very much the case. Growing the business at 5% a quarter leaves LSI with a revenue of $540 coming out of 4Q a year from now. With after tax margins of 12% (very reasonable), this leaves a 4Q profit of about $65 million, which leaves a per share profit of about 46 cents. This justifies a price (on the good days) of 46.00 a share. But just between us girls, let's get psychotic. Margins could reach 15%. If the industry grows by 20%, It is very possible that LSI could grow by 30%. There are good reasons for this. DVD is going to double. DCAM looks very good. Fibre Channel has a chance to explode. Networking will continue to grow. Telecom is recovering. Symbios will clearly benefit from the growth of the Xeon chip, and the commensurate growth of NT, which will become the standard on many individual PCs in the not so distant future. (Although I would hedge my bets because of Linux). Fewer growth opportunities appear for the momentum investor, and LSI becomes a momentum stock since as you know the big move in a stock is before its greatest growth is realized. If all of these scenarios prove true, then LSI could easily see $70.00 on its good days in a year from now--and given the depressed state of the semi business for the past three years, this is not out of the realm of possibility.