LSI Ups Guidance
LSI Corporation (LSI) recently updated its outlook for the first quarter of 2010. The company now expects revenues between $620 million and $640 million, up from the previous guidance of around $590 – $620 million.
The revised guidance reflects greater-than-anticipated strength in the recovery of enterprise IT spending during the first quarter.
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.
Agreement – Estimate Revisions
Following the upgrade in outlook by the management, estimates for LSI Corp have been on the rise. Nine out of the ten analysts covering the stock have raised their estimates for 2010 in the past thirty days, and six in the past seven days. There was no revision in the opposite direction.
For 2011, nine out of the ten analysts covering the stock raised their estimates and six in the past seven days. There was no revision in the opposite direction.
For the quarter ending March 2010, seven out of the nine analysts covering the stock have upped their estimates and five in the last seven days. There was no revision in the opposite direction.
Magnitude – Consensus Estimate Trend
The current Zacks Consensus Estimate for 2010 is 36 cents, up three cents in the last 7 days and up one cent in the last 30 days. For 2011, the current Zacks Consensus Estimate is 51 cents, up three cents in the last thirty days and up one cent in the last seven days.
LSI Corp has consistently beaten expectations. In terms of surprises, earnings exceeded the Zacks Consensus Estimate in the last quarter by 112.50%. On average, earnings exceeded the Zacks Consensus Estimate by 230.83% in the past four quarters.
The current Zacks Consensus Estimate for the first quarter is 7 cents, up by a penny in the last 7 days, towards the low end of management’s revised guidance of 7 – 11 cents. This excludes goodwill and other intangible asset impairment, stock-based compensation, amortization of acquisition-related intangibles, purchase accounting effect on inventory, restructuring of operations and other items, write-down of debt and equity securities and gain on repurchase of convertible subordinated notes.
Neutral on LSI Corp
On the fourth quarter earnings call, management stated that storage capacity and network traffic are both forecasted to grow significantly, driven by new mobile devices such as, the iPhone, smartphones, netbooks and smartbooks.
A majority of the company’s revenues are tied to enterprise purchases of servers, data storage and networking infrastructure and LSI has experienced strength across all product areas in the quarter which exceeded expectations.
Given the slowly improving demand environment, we maintain our Neutral rating on LSI, supported by Zacks #3 Rank.
Read the full analyst report on “LSI”
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