LSI Corp.'s (LSI) third-quarter profit surged as a $65 million tax benefit masked lower sales and margins. The storage-chip maker posted a rare profit and better-than-expected results.

The company is expected to show solid growth in the next few years on new products, including "system-on-a-chip" combination devices for hard drives and high-performance communications chips. Last year, semiconductor sales fell for the first time since 2001, when the Internet bubble burst, but semiconductor shipments are getting a boost from customers' replenishing inventories.

On Wednesday, Chief Executive Abhi Talwalkar said the revenue exceeded guidance due to strong sequential growth across all of the company's businesses.

LSI posted a profit of $52.5 million, or 8 cents a share, up from $11.4 million, or 2 cents a share, a year earlier. Excluding the tax benefit and other items, earnings rose to 18 cents from 14 cents. Revenue dropped 19% to $578.4 million.

In July, the company said it expected earnings to be as much as 6 cents on revenue of $520 million to $570 million.

Gross margin slid to 45.5% from 48.3%, but was above LSI's forecast of 34% to 39%.

LSI expects fourth-quarter earnings of 7 cents to 13 cents on revenue of $605 million to $645 million.

Analysts polled by Thomson Reuters expected 6 cents and $587 million, respectively. The company also affirmed its capital-spending target for the year.

Shares were down 0.2% at $4.98 in after-hours trading. The stock has grown by about half this year.

-By John Kell, Dow Jones Newswires; 212-416-2480; john.kell@dowjones.com