LSI Corp. Escalates Outlook - Analyst Blog
March 15 2012 - 7:15AM
Zacks
Recently announced, LSI
Corporation (LSI) upgraded its guidance for its upcoming
first quarter of 2012. Management stated that the company has been
experiencing steady sales in its flash-based products and also
witnessing a strong and fast convalescing hard disk drive
business.
LSI Corp. now expects revenues to
fall between $585 million and $615 million, from its previous
guidance of $550 million and $590 million. The company reported
revenues of $523 million in the last quarter, which was grossly
affected by the floods in Thailand. It is praiseworthy that the
company is showing signs of steady recovery so soon in its first
quarter of 2012.
The company’s employees have been
able to regain productivity levels efficiently of late. This has
induced management to escalate its GAAP income from continuing
operations to 6 cents per share – 10 cents per share, rising from
its previous expectation of a loss of 7 cents per share – earnings
of 3 cents per share. Excluding one-time items and stock-based
compensation, Non-GAAP income from continuing operations is now
perceived to fall between 12 cents per share – 16 cents per share,
elevating from 9 cents per share – 15 cents per share.
It is to be noted that the net
income revision has come forth after an increase in the dilutive
share count of LSI from 575 million shares to 590 million shares.
Apart from operational excellence, a one-time tax benefit of $41.7
million accruing from the SandForce acquisition can be ascribed to
the appreciation of net income that management now forecasts for
its first quarter of 2012.
LSI Corp. has reinstated its
guidance on margins for first quarter 2012. In this regard it
remains perspicacious about GAAP gross margin to fall at around 45%
which is towards the higher end of previously expected ranges of
42% - 46%. After accounting for special items of about $40 million,
the non-GAAP gross margin expectation comes in at around 52% for
the coming quarter.
While the company seems to maintain
a formidable stature to fend off competition, it should remain wary
of a few big players which are treading a similar path of advances.
MEMSIC, Inc. (MEMS) recently reported record
revenues of $21.5 million, rising around 89% year over year and
also projected an annual revenue increase of 39% - 46% in its
upcoming quarter. Other competitors posing serious threat to LSI
Corp. are Cabot Microelectronics Corp. (CCMP) and
Silicon Motion Technology Corp. (SIMO).
We continue to maintain a Neutral
recommendation on LSI Corp. Our view is supported with a Zacks #3
Rank on the stock which translates into a short-term rating of
Hold.
CABOT MICROELEC (CCMP): Free Stock Analysis Report
LSI CORP (LSI): Free Stock Analysis Report
MEMSIC INC (MEMS): Free Stock Analysis Report
SILICON MOTION (SIMO): Free Stock Analysis Report
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