Back to top

Analyst Blog

This page is temporarily not available.  Please check later as it should be available shortly. If you have any questions, please email customer support at support@zacks.com or call 800-767-3771 ext.  9339.

LSI Corporation (LSI - Analyst Report) posted adjusted net income per share (excluding one-time items but including stock-based compensation) of 13 cents in the fourth quarter of 2012, beating the Zacks Consensus Estimate of 11 cents.

Revenues

The company generated revenues of $600.1 million in the fourth quarter, up 14.7% year over year. Reported revenues were at the mid point of management’s guidance range of $590.0 million to $610.0 million and above the Zacks Consensus Estimate of $591.0 million.

Server and storage semiconductor revenues (products include ServeRAID adapter and software, flash, SAS, SAN and HDD) were $479.0 million, up 23.0% from the year-ago quarter.

Networking revenue decreased 11.0% year over year to $95.0 million, mainly due to decline in legacy revenues. Revenue from the IP business was $26.0 million.

Margins

Reported gross margin came in at 50.1%, up from 45.3% in the year-ago quarter. Operating margin was 3.8% compared with (1.1%) in the year-ago quarter.

Net income from continuing operations was $29.1 million or 5 cents per share versus $11.4 million or 2 cents per share in the year-ago quarter. But excluding one-time items and including stock-based compensation expense, adjusted net income from continuing operations was $76.4 million or 13 cents compared with $61.1 million or 11 cents.

Balance Sheet & Cash Flow

LSI Corp. ended the quarter with cash and short-term investments of $676.0 million, up from $643.0 million in the previous quarter.

Cash from operating activities was $94.9 million, down from $111.8 million in the prior quarter. Capital expenditures were $27.5 million, up from $25.7 million in the previous quarter. The company repurchased 7 million shares for approximately $46.3 million in the quarter under its $750 million share repurchase program.

Guidance

Management continues to be cautious due to the uncertainty in the macro environment and weak PC demand.

For first quarter 2013, management expects revenues between $535.0 million and $575.0 million. GAAP gross margin is expected in the range of 48.0% to 52.0%, while non-GAAP gross margin is expected in the range of 53.0% to 55.0%. GAAP EPS will be in the range of (3)-6 cents, while non-GAAP EPS will be in the range of 9-15 cents.

Conclusion

LSI Corp. delivered decent fourth quarter results with the top and bottom lines exceeding the Zacks Consensus Estimates. The continuing macro uncertainty and dwindling PC market prompted the company to provide a sequentially weak guidance.

But we are encouraged by management’s optimism regarding positive long-term growth story. The company is confident of gaining market share backed by new product launches and penetration in growing markets. Moreover, continuous share buyback is also positive for earnings.

Currently, LSI Corp. holds a Zacks Rank #3 (Hold).

Investors should look out for some other stocks that are slated to report this earnings season with positive Zacks Rank and Expected Surprise Prediction or ESP (Read: Zacks Earnings ESP: A Better Method).

Interdigital Inc. (IDCC - Snapshot Report) has a Zacks Rank #2 (Buy) with an ESP of +350.0%. Broadcom Corp. (BRCM - Analyst Report) has a Zacks Rank #2 (Buy) with an ESP of +1.9%. Yahoo Inc. (YHOO - Analyst Report) has a Zacks Rank #1 (Strong Buy) with an ESP of +14.8%.

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

Learn more

Start for as little as $4.50 per trade.

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
DIXIE GRP IN DXYN 15.84 +7.90%
BOFI HLDG IN BOFI 85.30 +4.97%
RAMBUS INC RMBS 12.31 +4.41%
VIPSHOP HOLD VIPS 148.73 +4.35%
NETFLIX INC NFLX 345.74 +4.32%