STOCKREPORTS

LSI Logic Corporation

NYSE Symbol LSI In S&P 500

Recent Price 32.44 52 Wk Range 44.25 - 20.38

Yield Nil 12-Mo. P/E 30.6

Quantitative Evaluation: Outlook (1 Lowest - 5 Highest) 4- Fair Value 39.10 Risk HIGH Earn/Div Rank B-
Technical Evaluation: BEARISH since 06/97 Rel. Strength Rank (1 Lowest - 99 Highest) 10 Insider Activity Neutral

Overview 18-JUL-97

We believe revenues will increase in the mid to high single digits in 1997, as the company's products should see renewed demand as the semiconductor industry's recent inventory correction has ended. The growth in sales will be led by the communications and computer sectors. Top-line growth will be limited by the recent strength of the dollar versus the yen, although this will not have a significant impact on the bottom line. Gross margins will benefit from product mix shifts, improved facility management, and higher yields. A relatively fixed level of R&D and SG&A expenditures will also lift profits. Overall, we believe EPS will improve to $1.33 in 1997, from $1.12 in 1996. Longer-term, growth will be driven by new product offerings, including the industry's first single chip architecture that can serve as the electronic brain of a totally new generation of consumer products dedicated to connecting with the Internet. In addition, the company recently introduced a single chip architecture for wireless communications applications.

Valuation 18-JUL-97

LSI Logic's share price has fallen sharply in recent months, and we have upgraded our opinion to accumulate based on the depressed valuation. Many chip stocks have been hit recently on speculation of a slowdown in the personal computer (PC) industry; however, LSI is transitioning away from PCs toward faster growing consumer and communications markets. We believe this more favorable mix will contribute to strong revenue and earnings growth over the remainder of 1997 and into 1998. Long-term growth will also be fueled by joint ventures with Micron Electronics and the BBC, which will leverage LSI's ability to make single chips that perform highly complex functions.

Key Stock Statistics

Fiscal Year Ending Dec. 31

Dividend Data: LSI has never paid cash dividends. A "poison pill" stock purchase rights plan was adopted in 1988. A 2-for-1 stock split was distributed in June 1995.

Business Summary 18-JUL-97

LSI Logic calls itself "the system-on-a-chip company". This is because the company is in the business of integrating the key functions of an electronic system on a single customized chip. This helps the company's customers, who are generally electronic original equipment manufacturers (OEMs), to reduce component design costs, improve product performance, retain control over proprietary logic, and shorten product development cycles.

LSI creates its system-on-a-chip products with its CoreWare design methodology. Using sophisticated electronic design automation tools, customers add unique product features around pre-wired cores of industry-standard architecture protocols and algorithms that are electronically stitched together on a single chip. CoreWare methodology is based upon application-specific integrated circuit (ASIC) technology, that is, semiconductors designed to satisfy a customer's particular requirement. LSI is the market share leader in the global ASIC market.

LSI directs its marketing and selling efforts towards selected customers in the consumer, communications, and computer industries. LSI Logic targets high growth end markets which are characterized by increasingly shortened product life cycles and ongoing changes in technological standards and performance requirements. As a result, customers in these markets tend to benefit from the flexibility of the company's customized ASIC design methodology to help differentiate their products while still complying with existing and emerging global industry standards.

The end markets served by the company's customers include digital video (DVD), digital broadcasting (set top box) and personal entertainment applications for the consumer market segment, networking and wireless communication for the communications market and desktop, and personal computer and office automation applications for the computer products market.

The company manufactures its products on a worldwide basis through direct sales and marketing and field engineering organizations and through independent sales representatives and distributors. Sony Corporation accounted for approximately 14% of the company's 1996 revenues.

Capitalization

Long Term Liabilities: $167,900,000 (3/97).

Curr. Ratio	3.0	2.9	2.4	2.3	1.7	2.4	2.3	2.6	3.3	5.3
% LT Debt of Cap.	17.5	15.3	28.0	34.5	36.5	28.3	32.1	33.3	29.2	30.0
% Net Inc.of Revs.	11.9	18.8	12.1	7.5	NM	1.2	NM	NM	6.3	4.1
% Ret. on Assets	7.7	15.3	9.7	6.5	NM	1.1	NM	NM	3.2	1.9
% Ret. on Equity	11.6	27.0	24.7	21.1	NM	2.9	NM	NM	7.4	3.8

Data as orig. reptd.; bef. results of disc. opers. and/or spec. items. Per share data adj. for stk. divs. as of ex-div. date. E-Estimated. NA-Not Available. NM-Not Meaningful. NR-Not Ranked.

Office--1551 McCarthy Blvd., Milpitas, CA 95035. Tel--(408) 433-4365. Website--http://www.lsilogic.com Chrmn & CEO--W. J. Corrigan. SVP & CFO--R. D. Norby. VP & Secy--D. E. Sanders. Investor Contact--Diana Matley. Dirs--T. Z. Chu, W. J. Corrigan, M. R. Currie, J. H. Keyes, R. D. Norby. Transfer Agent & Registrar--Bank of Boston. Incorporated--in California in 1980; reincorporated in Delaware in 1986. Empl-- 3,912. S&P Analyst: B. McGovern

This report is for information purposes and should not be considered a solicitation to buy or sell any security. Neither S&P nor any other party guarantee its accuracy or make warranties regarding results from its usage. Redistribution is prohibited without written permission. Copyright © 1997