) posted adjusted net income per share (excluding one-time items
but including stock-based compensation) of 13 cents in the fourth
quarter of 2012, beating the Zacks Consensus Estimate of 11
The company generated revenues of $600.1 million in the fourth
quarter, up 14.7% year over year. Reported revenues were at the
mid point of management's guidance range of $590.0 million to
$610.0 million and above the Zacks Consensus Estimate of $591.0
Server and storage semiconductor revenues (products include
ServeRAID adapter and software, flash, SAS, SAN and HDD) were
$479.0 million, up 23.0% from the year-ago quarter.
Networking revenue decreased 11.0% year over year to $95.0
million, mainly due to decline in legacy revenues. Revenue from
the IP business was $26.0 million.
Reported gross margin came in at 50.1%, up from 45.3% in the
year-ago quarter. Operating margin was 3.8% compared with (1.1%)
in the year-ago quarter.
Net income from continuing operations was $29.1 million or 5
cents per share versus $11.4 million or 2 cents per share in the
year-ago quarter. But excluding one-time items and including
stock-based compensation expense, adjusted net income from
continuing operations was $76.4 million or 13 cents compared with
$61.1 million or 11 cents.
Balance Sheet & Cash Flow
LSI Corp. ended the quarter with cash and short-term investments
of $676.0 million, up from $643.0 million in the previous
Cash from operating activities was $94.9 million, down from
$111.8 million in the prior quarter. Capital expenditures were
$27.5 million, up from $25.7 million in the previous quarter. The
company repurchased 7 million shares for approximately $46.3
million in the quarter under its $750 million share repurchase
Management continues to be cautious due to the uncertainty in the
macro environment and weak PC demand.
For first quarter 2013, management expects revenues between
$535.0 million and $575.0 million. GAAP gross margin is expected
in the range of 48.0% to 52.0%, while non-GAAP gross margin is
expected in the range of 53.0% to 55.0%. GAAP EPS will be in the
range of (3)-6 cents, while non-GAAP EPS will be in the range of
LSI Corp. delivered decent fourth quarter results with the top
and bottom lines exceeding the Zacks Consensus Estimates. The
continuing macro uncertainty and dwindling PC market prompted the
company to provide a sequentially weak guidance.
But we are encouraged by management's optimism regarding positive
long-term growth story. The company is confident of gaining
market share backed by new product launches and penetration in
growing markets. Moreover, continuous share buyback is also
positive for earnings.
Currently, LSI Corp. holds a Zacks Rank #3 (Hold).
Investors should look out for some other stocks that are slated
to report this earnings season with positive Zacks Rank and
Expected Surprise Prediction or ESP (Read:
Zacks Earnings ESP: A Better Method
) has a Zacks Rank #2 (Buy) with an ESP of +350.0%.
) has a Zacks Rank #2 (Buy) with an ESP of +1.9%.
) has a Zacks Rank #1 (Strong Buy) with an ESP of +14.8%.
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