LSI: Fiscal 1Q08 Financial Results

LSI Corporation reported results for its first quarter ended March 30, 2008.

First Quarter News Release Summary

• First quarter 2008 revenues of $661 million, exceeding guidance
• First quarter 2008 GAAP net loss of 2 cents per share
• First quarter 2008 non-GAAP** net income of 10 cents per diluted share, exceeding guidance
• First quarter operating cash flows of $96 million
• Cash and short-term investments of $1.2 billion

Second Quarter 2008 Business Outlook

• Projected revenues of $650 million to $680 million
• GAAP net loss in the range of 0 to 8 cents per share
• Non-GAAP net income in the range of 8 to 12 cents per diluted share

First quarter 2008 revenues were $661 million, a 42% increase year-over- year compared to $465 million reported in the first quarter of 2007, and down 11% sequentially compared to $741 million reported in the fourth quarter of 2007. Adjusting for the sale of the mobility business, first quarter revenues declined 7% sequentially compared to the fourth quarter of 2007. The first quarter revenue decline was less than expected on better than expected sales of semiconductors for storage applications.

First quarter 2008 GAAP net loss was $14 million or 2 cents per share, compared to first quarter 2007 GAAP net income of $30 million or 7 cents per diluted share. First quarter 2008 GAAP results compare to fourth quarter 2007 GAAP net loss of $2 billion or $2.87 per share, which included a $2 billion non-cash charge for impairment of goodwill. First quarter 2008 GAAP net loss included a net charge of $78 million from special items, including $55.7 million of amortization of acquisition-related items, $4.6 million of restructuring costs, and $17.8 million of stock-based compensation expense.

First quarter 2008 non-GAAP net income was $64 million or 10 cents per diluted share, compared to first quarter 2007 non-GAAP net income of $44 million or 11 cents per diluted share. Fourth quarter 2007 non-GAAP net income was $94 million or 13 cents per diluted share.

Cash and short-term investments totaled approximately $1.2 billion at quarter end. LSI also announced today that it has completed the purchase of approximately 147 million shares of its common stock for approximately $1 billion under two repurchase authorizations.

"Our first quarter results mark the third consecutive quarter of revenues that have exceeded expectations and reflect continuing strength in our core business," said Abhi Talwalkar, LSI president and chief executive officer. "Stronger than expected sales of our SAS and SAN silicon partially offset the effects of normal seasonality while the longer-term benefits of our strategic steps and sharp focus on storage and networking continued to grow."

"During the quarter we also won significant new silicon designs in the hard disk drive and server spaces and announced an innovative new family of single-chip, low-cost content inspection processors for security and networking applications which is receiving strong interest," added Talwalkar.

Bryon Look, LSI chief financial officer, said, "In the first quarter we continued to generate strong operating cash flows and effectively managed our expenses, delivering a solid financial performance. Our balance sheet remains strong and despite continuing macro-economic uncertainty we remain confident in the health of our business."

Capital spending is projected to be around $15 million in the second quarter and approximately $60 million in total for 2008.

Second quarter depreciation and software amortization is expected to be approximately $25 million.

LSI Corporation