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LSI Logic (NYSE:LSI) is acquiring Agere Systems (NYSE:AGR). LSI feels the need to bulk up in the mobile devices market. LSI’s press release talks about cell phones, MP3 players and other portable devices, as the place to be. Agere’s financials seem to be improving so perhaps now is a good time to get into the game.

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? How large is the upgrade got to have the new gadget market? Prices and margins decline rapidly in hyper-competitive markets. How fat will/can the margins be?

Not a straightforward as it first seems.

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