"The cow is of the bovine ilk;
One end is moo, the other, milk."
-- "The Cow," by Ogden Nash, 1931
But then LSI rips a page from the IBM playbook by going vertical. See, LSI doesn't just make chips for hard drives, it also makes adapter cards allowing servers to connect to the storage system and even some actual storage systems. When Sun Microsystems -- a key LSI customer and now a division of Oracle
That approach makes for a larger addressable market, as LSI can collect revenue several times over from the sale of what the end-customer sees as one unit of hardware. With this strategy firmly in hand, LSI saw first-quarter sales jump by 32% year over year, to $637 million. Second-quarter guidance points to as much as 4% sequential sales growth, which compares nicely with the usual weather vanes of the tech sector. Intel
LSI has changed a lot over the last couple of years as the company outsourced all of its manufacturing and is now on the cusp of paying off the last $350 million of its long-term debt. LSI is tightly bound to the health of the networking and storage markets and I'm not convinced that the company can steal share from the competition in any meaningful way. However, you could certainly pick worse industries in which to be stuck, and LSI should continue to track the returns of these substantial growth opportunities for the long haul.
Fool contributor Anders Bylund holds no position in any of the companies discussed here. During National Poetry Month, Ogden Nash can explain the double nature of a cow or a company better than anybody. Intel is a Motley Fool Inside Value recommendation. The Fool has created a covered strangle position on Intel. The Fool owns shares of and has written puts on Oracle. Try any of our Foolish newsletters today, free for 30 days. You can check out Anders' holdings and a concise bio if you like, and The Motley Fool is investors writing for investors.