LSI Life Storage Inc

LSI Corporation (LSI) generated revenues of $473 million from continuing operations in the first quarter of 2011, flat year over year and up 0.4% sequentially.

On March 9, LSI entered into a definitive agreement to sell its external storage systems business to NetApp, Inc. The transaction will be completed in May.

Including operations from the storage systems, LSI generated revenues of $629 million, down 1% year over year and down 5.3% sequentially, beating the Zacks Consensus Estimate of $622 million.

Server and storage semiconductor revenues (accounting for 71% of total revenues), which include hard disk drive silicon, SAS standard components, RAID storage adapters and software and storage area network ICs grew 3% sequentially to $336 million.

In Server RAID adapters, LSI Corp continues to grow its business at key OEMs such as International Business Machines (IBM), Cisco Systems (CSCO), Oracle (ORCL), Dell Inc. (DELL) and NEC as well as the channel.

Revenues from networking business (accounting for 24% of total revenues) were down 5.7% sequentially to $112 million. Revenues for the IT business were sequentially flat at $25 million.

Gross margin (excluding special items) came in at 52.4%, up from 48% in the fourth quarter. Operating margin came in at 12.0%.

During the quarter, LSI Corp generated $108 million of cash from operating activities. After repurchasing shares worth $97 million, LSI Corp ended the March quarter with cash and equivalents of $682.3 million, up from $676.6 million at the end of the previous quarter. 

Going forward, management expects revenues between $465 million and $495 million in the second quarter of 2011. Revenues from server and storage semiconductor business are projected to be sequentially up in Q2. LSI Corp expects strong sequential growth from networking business in the second quarter. Gross margin is projected between 52% and 54%.

Net income from continuing operations came in at $19 million or 3 cents per share compared to net income of $14 million or 2 cents per share in the year-ago quarter and net income of $5 million or 1 cent per share in the previous quarter.  

Excluding one-time items, net income per share from continuing operations came in at 8 cents, in line with the Zacks Consensus Estimate.

The positive results and guidance boosted the stock price which gained 5.80% in after-hours trading to close at $7.30.

 
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