LSI: Fiscal 1Q09 Financial Results

(in US$ millions)	1Q08	1Q09	Growth
Semiconductor revenues	373.8	325.0	-13%
Storage systems revenues	236.2	157.3	-33%
TOTAL	610.0	482.3	-21%
Net income (loss)	(606.3)	(103.5)

LSI Corporation reported results for its first quarter ended April 5, 2009.

First Quarter News Release Summary

First quarter 2009 revenues of $482 million
First quarter 2009 GAAP* net loss of ($0.16) per share
First quarter 2009 non-GAAP** net loss of ($0.03) per share
Cash and short-term investments of $1.1 billion

Second Quarter 2009 Business Outlook

Projected revenues of $470 million to $530 million
GAAP net loss in the range of ($0.09) to ($0.19) per share
Non-GAAP net income (loss) in the range of $0.01 to ($0.06) per share

First quarter 2009 revenues were $482 million, a 27% decrease year-over-year compared to $661 million reported in the first quarter of 2008, and down 21% sequentially compared to $610 million reported in the fourth quarter of 2008.

First quarter 2009 GAAP net loss was $104 million or 16 cents per share, compared to first quarter 2008 GAAP net loss of $14 million or 2 cents per share. First quarter 2009 GAAP results compare to fourth quarter 2008 GAAP net loss of $606 million or 94 cents per share. First quarter 2009 GAAP net loss included a net charge of $86 million from special items, consisting primarily of $42.7 million of amortization of acquisition-related items, $25.2 million in net restructuring and other items and $18 million of stock-based compensation expense.

First quarter 2009 non-GAAP net loss was $18 million or 3 cents per share, compared to first quarter 2008 non-GAAP net income of $64 million or 10 cents per diluted share. Fourth quarter 2008 non-GAAP net income was $41 million or 6 cents per diluted share.

Cash and short-term investments totaled approximately $1.1 billion at quarter end.

"Despite continued macroeconomic uncertainty, our first quarter revenues were above the midpoint of our guidance range with our storage semiconductor and networking businesses demonstrating strength late in the quarter," said Abhi Talwalkar, LSI president and chief executive officer. "We have also significantly lowered our operating expenses while continuing to invest in key opportunities which position us to grow at above-market rates coming out of the downturn."

Bryon Look, LSI CFO and chief administrative officer, said: "Through a combination of effective cost controls and streamlining actions, operating expenses for the quarter came in below our expected range. Inventory levels were also sequentially down and sharply lower on a year-over-year basis, contributing to our continued balance sheet strength."

Capital spending is projected to be around $15 million in the second quarter and approximately $50 million in total for 2009.

Depreciation and software amortization is projected to be around $20 million in the second quarter and approximately $90 million in total for 2009.

Comments

Here are some abstracts of the conference call transcript:

Abhijit Talwalkar, president and CEO:

"We have expanded our customer base with Tier-1 customer such as HP and emerging OEM’s such as QualWay while also gaining significant share in entry level platforms. Last quarter, we began ramping our flagship XBB2 mid-range platform at IBM under the DS5000 product line. We are pleased to announce that Sun is now ramping the XBB2 under the Sun Storage 6780 product family.

"In addition to the XPB2, we expect to release a new volume midrange platform in the second half of the year that will provide further enhancements to our current offering and drive a very meaningful product cycle in the volume midrange space. In storage virtualization, HP began shipping LSI’s storage virtualization manager software, which has been received favorably by IT managers in this difficult environment where our total cost of ownership and an immediate ROI is paramount. Our SVM software allows HP to deliver SAN Virtualization and advanced data management functionality for their mid-range EVA product line.

"With Seagate, we previously secured two generations of SoC designs for enterprise drives, and were also solely awarded multiple mainstream desktop and notebook hard disk drive SoC design wins for platforms expected to ship in 2010 and 2011 timeframes respectively.

"With Hitachi, we also previously secured next generation SoC wins across multiple platforms representing new business growth in 2010 and 2011. With these wins, we expect our share to grow in HDDs. WD, Samsung and Toshiba Fujitsu remain so sourced and represent a significant and attainable growth opportunity for LSI as they move away from sole source technology and pricing."

Bryon Look , executive VP and CFO:

"And turning now to our storage systems business. Business revenues were $157 million in Q1, sequentially down $79 million, or 33% from a seasonally Q4 2008. We experienced lower than expected systems revenues, primarily due to soft end-market demand for mid to high levels storage solutions. Storage system segment represented 33% of LSI’s total revenues in the first quarter."