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To: shane forbes who wrote (18673)	6/1/1999 9:20:00 PM
From: Jock Hutchinson	Read Replies (1) \| Respond to of 25814

Having once again gone over your initial post to Patrick, I have one conclusion. The problem is not the formulas, but what you have put into those formulas. Specifically, your core assumptions of $1.25 billion and $.6 billion for the base year are flat out wrong. And you don't have to ask me for my opinion, you have facts--specifically first quarter results to demonstrate just that. 1Q came in at $457 million. If indeed, we are working with your base of $1.25 and $.6 for the year of '98, then given an equal weighting to 4Q (which you correctly observe was a strong quarter. i.e. greater than a pro rata share of the $1.25 and $.60)the revenue figures for 1Q would have been 1.025 times (1.25/4 + .6/4)=$474 million (actually greater than that because you acknowledge that 4Q was stronger than average). Why do I use 1.025? Because the press release (and previous financial statements from 4Q '98 show that the increase in revenue for 1Q was 2.5% over 4Q. So your assumption is more than $19 million light to start with, which was one of my primary points and as you correctly observe, this miscalculation of yours is compounded going forward. Similarly going back to 4 Q results, the facts once again get in your way. The facts are that LSI grossed about $445 million in the fourth quarter where the previous Symbiois was fully incorporated in the revenue results. Now on one hand, we have Shane Forbes strutting his stuff for this thread telling us that "Therefore the base year 1998 is really 1.25b + 0.6b or 1.85b." According to your calculations, this quarter should have been in excess of (1.25/4 + .6/4)= $462 million. ( I say in excess of, because you state the 4Q was stronger relative to the other 3Qs) But you went back and extrapolated your figures from 3Q and decided to apply them to 4Q. It would have been a nice model going forward, but models going forward can never beat the results once they are in--only occasionally draw. Because the reality is despite what Shane said in June '99 should have happened--over $462 LSI told us did happen--$445 million. In short, you are simply, and clearly, wrong in your core assumption, and I would expect you to acknowledge just that. This was a classic case of garbage in. Garbage out. When I wrote that "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" it was clearly a poke at your use of the word "average" as well as your use of the $2.1 billion dollar figure. And that is my primary point--that for LSI to have a year where they achieve $2.1 billion dollars in revenue, they will far need to outperform the industry average going forward--by about 20 percentage points if the industry grows by 15 percent this year. And this is what I mean by being overly optimistic. I am not saying that LSI cannot or will not hit the $2.1 billion figure this year. What I am saying is that they will dramatically need to outperform the industry average to do such. Your assumption that a certain division of LSI's will far exceed the semiconductor industry average is fine as far as it goes, but you are assuming that none of the other five divisions will underperform the industry average. Moreover, for the purposes of this discussion your assumption only dilutes your gross miscalculations. As far as cash flows not increasing at a steady rate, Lord knows any holder of LSI stock for the past number of years might disagree with you. The damn revenues were dead in the water for the longest time. More to the point, I fail to see the significance of this remark other than the fact that you expect to see far greater growth in 4Q than in 2Q. Once again, this assumptiion does not dilute for one iota your flawed initial assumption. Son, you may not know it, but you just got your head handed to you big time. You were arrogant and pompous and ended up making a fool of yourself. You might want to take a look inside and practice a little more humility, spend more time looking at the assumptions that go into your calculations and less time getting into a pissin match with a skunk. To quote former President Calvin Cooledge--"You lose."