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LSI Corporation Message Board

  • trieuphu_1999 trieuphu_1999 Feb 11, 2013 3:53 PM Flag

    Interesting view....

    LSI is a supplier to both WDC and Seagate. LSI is attractive with a low price, decent cash in the bank, and no debt. Specifically for WDC, the company is currently sitting on a pile of cash, and could engage in a chess game and "CHECK" Seagate:

    1. At $7.17, 552M shares, cash in the bank at $676M and no debt, WDC can have LSI at the stock price at $5.95 ($3.96B minius cash). It's a bargain with P/S of 1.31.

    2. Now let's raise share price to 15 (doubling the current share prices). Using the same parameters as #1, LSI is worth $7.6B. It's a decent price at P/S of 3.03.

    3. Let's take a step higher at $20 per share, LSI is worth $10.36B. It's at P/S of 4.13.

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    • I think there may be too many ties between LSI and STX, in terms of roadmap and intellectual property for this to work. And even though the HDD market is forecast to be in decline, HDD controllers are still LSI's no.1 source of revenue and such a move would put that revenue train at risk.

      It's still kind of interesting, though, as it would give WDC an immediate presence in PCIe SSD to compete with FusionIO, and given them a broader entrance on the SSD market through an SSD controller maker. I think the market would like to see these sorts of moves on WDC's part. The trouble Marvell is in makes it even more interesting.

      That said, I suspect anything over a bid of $10 is a pipe dream (and I don't think even that is likely given LSI and STX close historical relation.)

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