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LSI Corporation (LSI)
Q1 2009 Earnings Call
April 29, 2009, 5:00 pm ET
Sujal Shah – Vice President of Investor Relations
Abhijit Y. Talwalkar – President and Chief Executive Officer
Bryon Look – Executive Vice President and Chief Financial Officer
Sumit Dhanda – Bank of America
Craig Berger – FBR Capital Markets
Sukhi Nagesh – Deutsche Bank
Hans Mosesmann – Raymond James
Christian Schwab – Craig Hallum Capital Group
Romit Shah – Barclays Capital
Daniel Amir – Lazard Capital Markets
Kaushik Roy – Wedbush Morgan
Suji De Silva – Kaufman Brothers
Blayne Curtis – Jefferies & Co
James Snyder – Goldman Sachs
Shawn Webster – JPMorgan
Previous Statements by LSI
» LSI Corporation Q3 2009 Earnings Call Transcript
» LSI Corporation Q2 2009 Earnings Call Transcript
» LSI Corporation Q4 2008 Earnings Call Transcript
Good afternoon and thank you for joining us. With me today are Abhi Talwalkar, President and Chief Executive Officer and Bryon Look, Executive Vice President and Chief Financial Officer. Abhi will begin the call with some opening remarks and highlights from our business, and then Bryon will provide first quarter 2009 financial results and guidance for the second quarter of 2009.
During this call we will be mentioning non-GAAP financial measures, which we may refer to as results excluding special items. Today’s earnings release describes the differences between our non-GAAP and GAAP reporting. You can find reconciliations of our non-GAAP financial measures to corresponding GAAP amounts on our website at www.lsi.com/webcast. At that site, you can also find a copy of the earnings release and a presentation, which highlights the key points from today's call, and provides an overview of our business. This may be particularly useful to new investors.
I also want to remind you that today's remarks will include forward-looking statements. Our actual results could differ materially from those suggested by the statements made today. Information about factors that could affect our future results is contained in our annual report on Form 10-K for the year ended December 31, 2008.
With that, it is now my pleasure to introduce Abhi Talwalkar.
Thank you, Sujal. Good afternoon and welcome. While the economy continues to uncertain I’m pleased with our execution in a difficult environment and the dedication that our employees continue to demonstrate. Both our revenues and non-GAAP earnings per share exceeded the midpoint of our guidance range, with the storage, semi and networking businesses showing strength towards the end of the quarter.
We also effectively managed our spending with total non-GAAP operating expenses decreasing 8% sequentially and below our guidance range. We continue to do a good job of managing our balance sheet ending the quarter with 1.1 billion in cash. Before we talk about our business and financial performance, I want to acknowledge that investors now face some interesting challenges in evaluating investment opportunities in the tech sector.
Ultimately it is about gauging future potential performance among the peer group and it’s deciding which companies are structured to play offense through these economic challenges and grow at above market rates coming out of the downturn.
With that in mind here are the key take aways I would like you to get from this call. First LSI is structured for success. Over the past couple of years, we have made substantial changes in our business strategy and cost structure. Second, we have driven our non-GAAP operating expense level significantly lower over the past two quarters and expect to maintain tight cost controls in the second half of 2009. And lastly, we are positioned to grow at above market rates due to the significant 2007 and 2008 design win closures, many of which are nearing production.
Two years ago, we began transforming LSI into a storage and networking company while solidifying our cost structure. Today, we are accompanied with a strong balance sheet that has reduced operating expenses by 25% over two years, divested volatile businesses and outsourced manufacturing. Unlike many other companies, we didn’t wait for the downturn to drive changes to our business composition and cost structure. While others are going through this risk assessment now, we’ve remain solidly focused on execution of key programs and winning more business in our targeted markets. We expect to continue gaining share of wallet in market leaders across our segments through this challenging environment.
Although IT purchases have temporarily contracted to conserve cash, this situation for businesses can’t persist for long. Growth and digital information and additional drivers such as growth and video traffic, proliferation of broadband and rich mobile services and the greater adoption of IT by the healthcare industry are examples of what will further push demand for capacity and network bandwidth enabling the end product segments we serve to fare better as economic conditions improve.
Now I want to review with you the business highlights for last quarter in our Storage and Networking businesses. I would like to begin with storage systems and storage virtualization software for our time to market transitions on new technology offerings combined with our no conflict channel model and lower total cost of ownership software, makes us a key partner for the leaders in the industry.
We have expanded our customer base with Tier-1 customer such as HP and emerging OEM’s such as Huawei while also gaining significant share in entry-level platforms. Last quarter, we began ramping our flagship XBB2 mid-range platform at IBM under the DS5000 product line. We are pleased to announce that Sun is now ramping the XBB2 under the Sun Storage 6780 product family.