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

To: sea_biscuit who wrote (18587)	5/27/1999 6:54:00 PM
From: patrick tang	Read Replies (2) \| Respond to of 25814

Word is TSMC maxed out in March and UMC maxed out for May & June and that foundry wafer price may be going up in Q3! What this about fab-less turning chip-less? No wonder LSI is ramping Gresham as fast as they can. patrick

To: sea_biscuit who wrote (18587)	5/28/1999 12:53:00 PM
From: country boy	Respond to of 25814

Hey Dipy and others: I've been out of LSI for a while; sold a bit early at 38 and didn't play at all in the 40's. I bought into that correction the other day at 33 3/4 to 34 1/4 and will hold till we're back in the 40's at least; hope we can bust through 38 again soon. good luck, all cb

To: sea_biscuit who wrote (18587)	5/29/1999 9:38:00 PM
From: shane forbes	Respond to of 25814

Dipy: The Dividend thing... (1) Dividend Achievers: As far as I can tell the essence of having a company that has paid out a dividend (even an increasing one) and that has not jeopardized its capital structure (by borrowing to support its dividend payouts) is that the company has increased sales at a steady clip and has had a pretty steady ROE. The dividend is sufficient proof. But it is by no means necessary. After all I can just as well run a screen that looked for x% rev. growth and x ROE and x margins and come up with a similarly stellar list. In fact if companies are in the right biz, it is much better to retain earnings than pay them out in dividends. Paying out dividends will slow your sales rate all else being equal (capital structure, profit margins) - the reason is you have fewer assets now because you paid out the dividend - these lost assets equate to lost sales. Worse it is inefficient because of the double taxation. As an aside you can look at companies that buy back shares as a better form of returning wealth to the shareholders. The one point about the dividend is the certainty factor. That clearly stands for something - lower risk of ownership of the stock (in theory). But as a rule I would rather have the companies reinvest the money. (2) Dividend Investing: That book that said companies that increase their dividend by so much % a year is a good thing because in time your dividend payouts will be greater than your initial investment was only halfway right. When I first read it I too was impressed. Until you realize that making investment decisions on capital invested 10 years ago is not the way the world works. Or financial management. Consider a company that has a ROE of 20%. Then after 10 years its equity would be up 519%. So if it started with $100 in equity, it will now have at the end of year 10, $619 in equity. Now if ROE is 20%, in year 11 it will make $123 in earnings. So in year 11, it is making a profit higher than the initial investment. However is this not to be expected? It is the 'compounding' effect at well-run companies. It is no more astounding that its earnings down the road will equal or exceed the initial investment than it is for a dividend payout somewhere down the road to exceed the initial stock price of several years ago. Besides the company that did not pay the dividend will eventually be much bigger than the company that paid the dividend - after all he company that paid the dividend and increased it lost out on reinvestment gains of 20% compounded for several years. Having said all of this, dividends are cool. Some companies have so much free cash flow that they can pay out dividends and still mint money. BUT a history of an increasing dividend payout is not sacrosanct. And like anything else it should be no more than a starting point into an understanding of the company. I can do (and have done) just as well looking for companies with characteristics that happen to coincide with the dividend achievers (increasing sales, high ROE etc). The key point is that increasing sales and high ROE are necessary and sufficient - a company paying out a dividend, even a steadily increasing one, is almost incidental.