There's this global macroeconomic crisis going on, floods in Thailand are holding back both chip-building supplies and orders from some of LSI's largest customers, and the company is up to its ears in an audacious change in strategy. Some of this stuff is under LSI's control; most of it absolutely isn't.
And amid all this chaos, the company just reported third-quarter results smack in the middle of management guidance, and right in line with Street targets as well. But LSI didn't stop there: Separately, the company also announced a $370 million deal to acquire privately held SandForce.
The SandForce deal is a bigger game-changer than the similarly sized sale of LSI's external storage division to NetApp
And LSI gets a foot in the SSD door with SandForce customers from OCZ Technology
SandForce relies on third-party manufacturing services. The flash memory chips that complete an SSD product are made all over the world, from Brazil to Singapore to Idaho. This sprawling supply chain isn't terribly sensitive to local disasters, unlike traditional hard drives.
So LSI got out of storage system sales to focus on the nuts and bolts of the exploding SSD market. Consumers expect thinner, lighter, and faster systems these days, exemplified by the Apple
I think LSI made a sweet deal here, and if the crisp execution amid today's typhoon-class headwinds is any indication, I expect the company to milk the SSD opportunity to the last drop.
My All-Star CAPS portfolio has contained an outperform call on this four-star stock (out of five) for some time now. LSI hasn't helped my world-beating ambitions so far, but I'm a patient Fool, and management keeps refreshing my trust by making all the right moves. The long-term opportunity looks larger than ever. Click here to take your own CAPS position in LSI -- or any other stock.