LSI Corporation (LSI) recently announced its next-generation link communication processor (LCP) designed to allow migration of network traffic to IP-based networks.
An asymmetrical multicore system on a chip (SoC), the new LCP is based on the highly-successful LSI link layer processor. It supports all major protocols, enabling wireless, mobile backhaul, multiservice and router; it also enables broadband access traffic to be easily and efficiently migrated from current-generation networks to next-generation networks at much lower cost and risk than previous solutions.
Earlier, LSI reported revenues of $638 million in the fourth quarter of 2009, up 5% from a year ago and up 10% sequentially.
The revenue growth was driven by an early-stage recovery of enterprise IT spending. As more than 80% of the company’s revenues are tied to enterprise technology spending, LSI Corp is all set to benefit from this recovery going forward.
Semiconductor revenues for the quarter came in at $381 million, up 2.4% sequentially. The storage systems business (including external storage systems and server rate adapters and software) generated revenues of $257 million in the fourth quarter, up 24% year over year. LSI experienced growth across all systems product categories.
On the earnings conference call, management stated that LSI successfully expanded its customer base in Hard Disk Drivers (HDDs), ramping 6-gig SAS solutions with nine of the top ten server OEMs. The company also secured volume design wins with Intel Corporation (INTC) and Cisco Systems Inc. (CSCO).
Gross margin came in at 47.4%, up 180 basis points sequentially but slightly below management’s guidance. Operating margin came in at 14.5%, compared to 9.1% in the previous quarter.
Net income reached $124 million or 18 cents per share, compared to a net income of 41 cents or 6 cents in the year-ago quarter and a net income of $119 million or 18 cents in the previous quarter. The reported net income per share easily beat the Zacks Consensus Estimate of 8 cents.
LSI Corp. generated $77 million of cash from operating activities and ended the quarter with cash and equivalents of $962 million.
For 2009, LSI Corp. recorded revenues of $2.22 billion, down 17% from a year ago. Net income came in at $232 million or 35 cents per share, compared to a net income of $283 million or 44 cents in 2008.
Going forward, management expects revenues between $590 million and $620 million in the first quarter of 2010, down from $638 million in the previous quarter.
Storage capacity and network traffic are both forecasted to grow significantly, driven by new mobile devices such as the iPhone, as well as other smartphones, netbooks and smartbooks.
Management expects that the flood of data and the drive towards IP-based networks will provide great opportunities for LSI Corp.’s storage and networking products.
Gross margin is projected between 45.0% and 47.0%. Operating expenses, excluding special items, are forecasted around $218 million – $228 million, up from the fourth quarter due to the reinstatement of certain compensation and benefit items. Earnings per share (EPS) are estimated between 4 cents and 10 cents.
Headquartered in California, LSI Corporation designs, develops, and markets complex high-performance semiconductors and storage systems. The company provides silicon-to-system solutions that are used at the core of products that create, store, consume and transport digital information.
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