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

To: shane forbes who wrote (18646)	5/31/1999 11:25:00 PM
From: Jock Hutchinson	Read Replies (2) \| Respond to of 25814

Shane: Your response to my valid criticisms was childish at best. It is not enough to be bright and brittle. One must be thick skinned if one is truly going to have one's opinions endure. As far as the personal criticism of me is concerned, I have two observations. The first is that the greatest export this country has ever had is the rule of law. And unlike others, lawyers don't get upset when their opinions are chastised. Indeed, what I am for the purposes of this thread is a serious investor of both my and my family's money in LSI Logic. Accordingly, I take exception when one lies about various officers of LSI, as K did last year, and to a lesser extent, I take exception when a self-styled “expert” on one of our core holdings represents certain facts about a company that are simply not true. And in my opinion, your representations about LSI's future prospects have been far too optimistic for far too long not to go unchallenged. Now let's move on to the rest of your diatribe, which is notable for just as much to which you did not respond as to what you did respond. “The convertible offering was to replace bank debt not for cap.” Not so. The bank debt was clearly incurred for capital expenses. Things like a fab, intellectual property, and all the other things that go into making a company then called Symbios. Moreover, at the terms offered, this is clearly going to be an equity offering. Why it's “Quasi” is beyond my understanding.. “I sure as hell did not foresee the debacle in Asia (basically this pushes out everything 1 year)” Your post is dated in late November of '97, and the debacle in Asia was nearly a month old by that time, so you cannot use that as an excuse for your wildly optimistic forecasts in what has become the consumer Products division. Your post predicting the revenue for DCAM, DVD, and PSI for this year is about 40% to high. Similarly, your statement that LSI needs to grow its revenues by 42% this year to be “average” is even more ludicrous, and I feel that given your basic lack of knowledge of what LSI's corporate structure, that it was time that someone called you out on the carpet. Instead of accepting this criticism, you chose to say that you could call the different storage divisions whatever you wished to call them. Worse yet, you didn't really respond to the many valid criticisms in the post. THUS YOU STILL HAVEN”T STEPPED TO THE PLATE WITH THE SORT OF RESPONSIBLE FIGURES THAT ONE WOULD EXPECT FROM A SERIOUS FINANCIAL ANALYST. Now as far as our disagreement during the period just after the 3Q CC, I stand by my remarks. LSI was clearly trying to hold water, and their cuts were intended to do just that. By their own admission it was a model based on zero growth in revenues, and there was nothing there to suggest that LSI had moved up to be one of the big boys as you wrote. Moreover, I still find it somewhat disquieting that LSI has gone from 20% R&D to 13% projected R&D. I know that there are “good” reasons for the lower R&D such as the fact that R&D stayed high during a period of zero growth in revenues, R&D for Storage Systems is traditionally lower, R&D for some of the Symbios purchases was repetitious, R&D will now be shared with Fab partners such as in Malaysia, and some of the R&D has not paid off, and thus was cut (e.g. ATM R&D). Nevertheless, I still feel that the long-term consequences of the steep cut in R&D could portend of serious problems. Moreover, as it turned out, non-Symbios related cuts didn't happen because of the upturn in the market. By 4Q CC, it was obvious that the semi market had turned around, and I made it clear in my report that I felt that LSI would be a $50 by the end of this year. But the difference between your infrequent reports of the CC and mine is that I try very hard to distinguish between my verbatim report of what is said and my opinion. By contrast, I feel that you have put yourself in a position where you are coming close to hyping the stock, and I feel that this does a disservice to the company and thus my holding.