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

To: Tony Viola who wrote (18542)	5/24/1999 3:52:00 PM
From: patrick tang	Read Replies (2) \| Respond to of 25814

Tony, I am assuming that you are referring to the capitol investment that Sony made in the Toshiba fab in order to get capacity. My guess is they will sell some, if it turns out to be as awesome as everybody says it is. At $600 and being able to do web/email and linux, perhaps it another way to get 'PC' into the other 45% of American homes that do not have a PC yet. Now if it also comes with a camera and mike to do web-phones ... I doubt that LSI could have done too much better than Toshiba. The capitol investment needed to build the capacity is so massive for a foundry/supplier to dedicate to one customer. As for other stuff, I have been expecting a lot of the leading edge consumer guys to give up on running fabs and turn towards their expertise of consumer product definition and marketing. To me that's inevitable once DRAM ceased to be a viable fab filler. I hope that LSI can leverage their relationships in Japan and get into some of those leading edge consumer accounts. In a couple of years, LSI will need a lot of sales to be able to afford the 0.18um 12". Consumer stuff may be able to provide that sales volume. By the way, with DRAM pricing tanking once again, Toshiba and all other Japanese DRAm guys are not going to be making again this year like they hoped originally. No profits, no more capex. That is nothing but good news for LSI. down the road. patrick

To: Tony Viola who wrote (18542)	5/28/1999 1:03:00 AM
From: shane forbes	Read Replies (1) \| Respond to of 25814

Tony: I like the PlayStation II set up as it is. Let Toshiba do the hard stuff. LSI is doing a nifty chip that should mean a nice stream of cash over the next few years. Sure the Toshiba chip would have meant (much) more but it would also have meant that LSI may have had to forgo other research and development the last 2 years (the opp. cost thing) and that in turn would have placed LSI in a precarious position if they failed (the don't bet on one horse thing). Also the investment of 1 billion is huge - even if Sony ponied up some of the cash LSI would have had to divy up some dough too and I'm not sure LSI needs more debt at this point. As an aside note that 1 billion is a HUGE number. Even if Sony is not interested in making money on the hardware the size of the investment is indicative of the future revenue stream to the players here. In a word: HUGE. LSI got just enough to chew on and not so much that they could have choked themselves on. A win-win. Note that in the final analysis financial management is made up of 2 distinct stages: - INVESTMENT NOW - CASH FLOW LATER This is why the analysts are so gung-ho over the Playstation. If they can assign those cash flows now, the risk in owning LSI goes down, the valuation goes up. Conversely, when LSI was subject to those rumors of the impending Sony Playstation loss those so many times in the last 2 years (all idiots and morons and dimwits I say), the stock got hammered relentlessly. The tables have now turned and the cash flow is now a floor of support. Exactly where I don't know.