LSI Corporation (
) generated revenues of $523 million in the fourth quarter of 2011,
up 11.0% year over year but down 4.3% sequentially and surpassed
management'sexpectations of $500 million to $550
The top line was impacted by Thailand flood to the tune of
roughly $40 million.
On May 6, 2011, LSI completed the sale of its external
storage systems business to
). The financial results of the external systems business have been
classified as discontinued operations.
With the divestiture of storage systems business, LSI has
tranformed into a pure play storage and networking semiconductor
The company recently acquired SandForce, which should enable the
company to benefit from the growing adoption of solid-state drives
and flash storage solutions.
SandForce is a leading provider of flash storage processors for
enterprise and client flash solutions and solid state drives
Server and storage semiconductor revenues (accounting for 74% of
total revenue), which include products from ServeRAID adapter and
software, Flash, SAS, SAN and HDD businesses, were sequentially
down 4% to $389 million. The decline was primarily due to the
flooding in Thailand and the related impact on the disk drive
Revenues from the networking business (accounting for 21% of
total revenue) were sequentially down 8% to $107 million, primarily
due to softness in the wireless market along with supply chain
constraints owing to the floods in Thailand. Revenues from the IP
business were sequentially flat at $27 million.
In hard disk drives, LSI Corp unit TAM declined by approximately
30% from the third quarter due to flooding in Thailand.
Nevertheless, LSI Corp continues to gain market share in Seagate's
enterprise platforms and ramp new SSCs into client drives. The
company is confident about supporting growth at its HDD customers
in the first quarter of 2012.
LSI Corp generated revenues of $2.04 billion in fiscal 2011, up
9.3% from a year ago. Net income came in at $331.5 million or 55
cents per share compared to a net income of $39.8 million or 6
cents per share in 2010.
Gross margin (excluding special items) came in at 49.5%, down
from 52.2% in the previous quarter and below management's
The company recorded an inventory charge of approximately $7.5
million related to inventory damaged at one of the subcontractors
in Thailand during the flooding.
Operating margin came in at 10.7%, down from 15.2% in the
Net income from continuing operations came in at $11.4 million
or 2 cents per diluted share compared to a net income of $31.6
million or 5 cents in the previous quarter and a net income of
$4.5 million or $0.01 per diluted share in the year-ago quarter.
Excluding one-time items, net income per share came in at 10
cents, easily beating the Zacks Consensus Estimate of 8
During the quarter, LSI Corp generated $55.4 million of cash
from operating activities and used $14.1 million in capital
expenditures. The company repurchased 5 million shares for
approximately $27 million in the third quarter.
In 2011, LSI repurchased 72 million shares for approximately
$499 million under its $750 million authorized buy-back program.
The company still has approximately $251 million remaining in its
authorized buy-back program.
LSI Corp. ended the quarter with cash and short-term investments
of $935.5 million, up from $878.9 million at the end of the
Going forward, management expects revenues between $550 million
and $590 million in the fourth quarter of 2011. The company expects
to meet all customer demand in the first quarter. Organic growth is
expected at 16%.
LSI Corp expects server and storage semiconductors revenues to
be sequentially up. The guidance also assumes approximately $20
million to $25 million of flash storage processor revenues
associated with the SandForce acquisition. Server-related revenues
are projected to be down sequentially down due to expected
seasonality. Networking semiconductor revenues is projected to be
relatively flat to down.
Gross margin is projected around 51%, (+/-1%). Income from
continuing operations is forecasted to come around a loss of 7
cents to earnings of 3 cents per share. Excluding one-time items
and stock-based compensation, income from continuing operations
came in at 9 cents to 15 cents.
The better-than-expected results and upbeat guidance drove a
6.92% increase in the share price in after market hours trading to
close at $7.57. The stock, earlier, lost 0.84% to close at $7.08 in
LSI CORP (
): Free Stock Analysis Report
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