LSI's Logic: Become Bigger By Becoming Smaller; New CEO Paring Units; Sees gains by homing in on chipmaker's strength in DVD recorders, audio.(INTERNET & TECHNOLOGY)(Q & A)

Byline: JAMES DETAR

Chief Executive Abhi Talwalker is putting LSI Logic on a diet.

It's not, he maintains, that the chipmaker has grown fat. It's more that it will be better able to compete if it's a lean, mean machine, he says. He plans to pare down the number of product lines so he can focus on a few key markets.

In May, LSI named Talwalker, a 12-year Intel veteran, to succeed longtime CEO and founder Wilf Corrigan. At first, Talwalker says, the market wasn't sure about him. He figures that's one reason LSI's stock slid from 10.75 in July, still the stock's highest price since February 2004, to less than 8 in mid-December. It now trades near 9.75.

This quarter, LSI expects revenue of about $478 million. That would be up 6% from first-quarter 2005.

IBD gives its stock a Relative Strength Rating of 79. That means it's outperformed all but 21% of stocks in the past 12 months.

Talwalker recently spoke with IBD about his first months at the helm.