If LSI is to properly leverage the acquisition, they must harness market drivers. Yes, portable devices have experienced impressive growth rates. But Agere’s revenues over the past several years have not. Agere needs to have something very special in the lab to reverse that problem. The stock has moved sideways for the past two years. So if something special is in the lab the market has not sniffed it out.
The deal also needs the market for portable devices to continue booming. How large is the remaining untapped market? Prices and margins decline rapidly in hyper-competitive markets. How fat will/can the margins be?
Not as straightforward as it first seems.
LSI 1-yr chart: