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

To: Jock Hutchinson who wrote (18669)	6/1/1999 6:56:00 PM
From: patrick tang	Read Replies (1) \| Respond to of 25814

Hey Jock, you are talking to yourself <g>. That $2.1B # is really something else! I hope that Wilf did not out do himself on that one. I'll be very satisfied with even $2B - that would imply a 6% sequential or 25% yearly growth rate. If he can do more, hats off. Just don't want him to set up expectations that he may not meet. You are right, if he is to do $2.1B for this year, hard to see how he can keep the lid down at 6% for Q2. This is June now. That means they have seen all the bookings for Q2. So somebody out there will know already roughly what this Q is going to look like. Keeping my eyes peeled open for any news from any analysts. But then again, ADI had a 14% sequential Q last Q when they only promised 6% to 8%. Except for LSI, that was the only guy on my stock list today that was in the black. patrick

To: Jock Hutchinson who wrote (18669)	6/1/1999 7:53:00 PM
From: shane forbes	Read Replies (1) \| Respond to of 25814

Re: In other words, LSI needs to grow at an annualized rate of almost 35% a year just to have an "average" year, when the anticipated average for the industry is 15 percent In kindergarten your Ms. Van Der Bosch may give you an A for this remark. But in 1st Grade you may only get a C. Because your numbers don't tell the whole story. Symbios had only a 5 month contribuition in last year's results. My guess is that 5 months equated to 0.24 billion - if Symbios had made a full year contribution it would have been roughly 0.6 billion for the year. Therefore the base year 1998 is really 1.25b + 0.6b or 1.85b. Hence the 'normalized' growth rate to achieve 2.15b (ex 0.02b for Seeq's 6 months) is actually 16%. In 2nd Grade they would have given you an F. Why? Because they will say to you how can you grow at such a high annualized rate (35%) and still attain just the industry average growth rate of 15%. Impossible. Your conclusions do not jive with your assumptions. In 3rd Grade the teacher would have pointed out that what you're calculating is a weighted average growth rate and that the reason you are getting 16% is because the Storage Systems piece is growing higher than the chip average growth rate of 15%. In 4th Grade the teacher may have done this: Weighted Growth Rate = (0.68)(15%) + (3/4)(0.32)(15%) + (1/4)(0.32)(30%) = 16.2% or about 16%, where the terms are the contributions from each section multiplied by the growth rates. In 5th Grade the teacher may have indicated that to work out what the 'average' quarterly sequential growth rate is to achieve a certain revenue goal, you are really calculating the sum of: R + R(1+i) + R(1+i)^(2) + R(1+i)^(3). In 6th Grade she may indicate that this is a geometric series. In 7th Grade she may have told you the value: S = R { (1+i)^(4) - 1 } / (i) In 8th Grade she may have indicated that you can break down the above creating a 3rd degree function in i: S = R ( i^3 + 4ii + 6i + 4 ) In 9th Grade you may have plotted the function and calculated roots. In 10th Grade you may have tried to solve for the roots of a generic cubic polynomial. Or better you use a calculator to plot the roots for you. In 11th Grade the teacher takes you back to the 5th Grade and mentions that this looks like the future value of an annuity. Voila. But you don't have a financial calculator. In 12th Grade they give you the venerable HP-12C. You plug in the 3 numbers: FV = -2150 PMT = 457 n = 4 the calculator rumbles for a while... And there we go i = 10.9% it says. In University you learn that the cash flows do not increase at a steady rate since Q4 ought to be disproportionately larger. There you also learn that 6% Q2 growth is ok but unless you get an extremely large growth rate in Q4, the 2.15 is unattainable. Now you can see my initial post to Patrick.