LSI Raises Guidance

LSI Corporation (LSI) 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.

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.

The revised guidance reflects greater-than-anticipated strength in the recovery of enterprise IT spending during the first quarter.

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.

Gross margin is projected at 47%. Operating expenses, excluding special items, are projected at $228 million at the high end of the prior guidance.

Net income is projected between 7 – 11 cents, up from the earlier forecast of 4 – 10 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.

The current Zacks Consensus Estimate for the first quarter stands at 5 cents with an upside potential of 20%. With the increase in guidance by management, we expect revisions in the Consensus estimate.

LSI Corp has consistently beaten expectations. In terms of earnings 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.

Meanwhile, management also announced that the Board has authorized a stock repurchase program of up to $250 million.

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.

Read the full analyst report on LSI