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

To: patrick tang who wrote (18602)	5/28/1999 1:25:00 PM
From: shane forbes	Read Replies (3) \| Respond to of 25814

Patrick: The nice thing about Silterra is that it adds about 80c pre-tax to earnings over the next few years and maybe 10c next year depending on the license structure. Last year I was waiting for LSI to partner with other companies as LSI's cost structure is too high. Well now we've had the restructuring (to get rid of dead-wood) and the foundry deal. Net net this reduces LSI's costs considerably and in theory should bump up the ROE and ROIC numbers. These numbers in turn drive investments from equity holders and so I expect LSI's valuation to gradually improve. It will never be on par with the Alteras of the world, but it will be higher than it was in the past. Ever wonder what would happen if one of those fabs caught fire or there was a war or something and all of a sudden chip supply went down to zip. With low inventories these days it will be interesting...

To: patrick tang who wrote (18602)	5/28/1999 3:58:00 PM
From: Moonray	Respond to of 25814

Bell Micro widens LSI Logic pact Electronic Buyer's News - May 24, 1999 Silicon Valley- Bell Microproducts Inc. has signed an agreement to distribute LSI Logic Corp.'s MetaStor RAID storage systems, effective immediately. The distribution pact is an expansion of an existing authorization in the United States, under which Bell Micro carries the UltraSCSI host-adapter line from Symbios Inc., now part of LSI. With the addition of the MetaStor product line-which includes S-Class RAID storage systems, Symplicity Storage Manager software, and network-attached storage (NAS) devices-Bell Micro can offer VARs and system integrators all the pieces needed to build storage-area network (SAN) and NAS solutions, the company said. Custom configurations are also available from the distributor's value-added center. "Companies are realizing that data is one of their most important assets," said Phil Roussey, senior vice president of computer product marketing for San Jose-based Bell Micro. "SAN solutions and NAS devices have emerged as state-of-the-art methods of safeguarding and managing these assets," he said. The distribution agreement will help LSI Logic develop new reseller partners for the MetaStor product line, according to Bill Reed, managing director of the Wichita, Kan.-based MetaStor division. According to Bell Micro's chief executive Don Bell, who tipped details of the agreement last month to members of the financial community, the MetaStor products will play well into Bell Micro's trademark PCs and server business, which it acquired with Almo Computer Products last fall. Bell said the enterprise storage market-particularly storage-area networks and Fibre Channel products-will represent a significant portion of the company's growth this year, though it continues to be under intense margin pressure. In its first quarter ended March 31, the company's gross-profit margin fell to 8.8% of sales compared with 12.5% in the first quarter of 1998. Also last week, Bell amended its financial results for the first quarter to account for the impending sale of its Quadrus manufacturing unit. The company intends to sell San Jose-based Quadrus to Pemstar Inc. Rochester, Minn. Because of this agreement, financial results reflect Bell Micro's continuing operations and, separately, the results from the discontinued Quadrus operations. Revenue from continuing operations in the first quarter of 1999 were $219.6 million, up 88% from $116.7 million in the same period a year ago. Income from those operations was $1.9 million, up 15.1% from $1.6 million in the first quarter of 1998. After accounting for a loss from the discontinued operations of $651,000 in the current quarter, the company's net income was $1.2 million, or 14 cents per fully diluted share. This compares with a loss from the Quadrus business of $1.4 million in the first quarter of 1998, which resulted in net income for the company of $195,000 for the period, or 2 cents per diluted share. Bell said the sale of Quadrus was prompted by the desire to focus on its core distribution operations. While the contract manufacturing unit was expected to be profitable in the current quarter, Bell's distribution sales for the the year ended December 1998 were $575 million, while Quadrus has sales of $86 million. Copyright ® 1999 CMP Media Inc. o~~~ O

To: patrick tang who wrote (18602)	5/29/1999 2:41:00 AM
From: shane forbes	Read Replies (1) \| Respond to of 25814

Patrick: One problem I have with pure IP companies is that IP, for all the grandeur, is nothing more than an idea or a collection of ideas. There are plenty of smart people with plenty of ideas - but very few smart people with billion dollar fabs. I think you can make a lot of money on a few smart ideas for a few years but I don't think you can make a lot of money on a few smart ideas for several years. That is, I don't think IP per se is a sustainable long term model. Why? Someone smarter will come along with a better idea and then what? (XLNX and ALTR with unique chips are a different breed.) At least with a fab and the IP, you can make money in more than one way. Each of your chips and there will be millions of them carries with it a double premium - a charge for your IP and a charge for your manufacturing. If you are intelligent and a bit lucky, you will make much more money here than if you were solely IP based. In turn you then take that excess cash (the manufacturing premium) and diversify or consolidate other IP or buy other IP or whatever - basically you get bigger faster with a fab than without a fab. Hence though it takes more capital to get going and hence is intrinsically riskier it is not true (I think) to assume that IP is the way to go. There has to be some manufacturing for you to bleed your one bright idea for every penny its worth! Smaller companies have to share their idea with the foundries and I sense the foundries make a bunch of money as a result. It is not quite a win-win for the fabless companies. Maybe it will be as foundry capacity explodes and the foundry companies have to fight for every chip but until then the foundries are getting a nice cut out of the IP company's bright idea. Having said that it is getting prohibitively expensive to go it alone these days as fab costs are escalating rapidly. Therefore a compromise - outsource some, partner a lot, BUT keep your own fab as well. To survive as a LONG term player in this industry you need to make lots of money when the going gets good and lose not too much when the going gets bad. I think LSI's (& MOT's) model is such a compromise.