Wednesday, storage systems and chip maker LSI Corp. (LSI) reported a swing to fourth-quarter profit on higher revenues and the absence of a $541 million impairment charge recorded last year, with reported earnings and revenue beating Street estimates. The company indicated increasing signs of an early-stage recovery of enterprise IT spending and said it is well positioned to benefit from this trend. Looking ahead, the company also provided its first quarter forecast, in line with current Street estimates.
The Milpitas, California-based company reported a fourth-quarter net income of $64.81 million or $0.10 per share, compared to a net loss of $606.35 million or $0.94 per share a year ago.
On a non-GAAP basis, fourth-quarter net income soared to $123.92 million or $0.18 per share from $41.29 million or $0.06 per share in the fourth quarter of 2008.
On average, 11 analysts polled by Thomson Reuters estimated earnings of $0.11 per share for the quarter. Analysts' estimates typically exclude special items.
Fourth quarter 2009 results included special items of $59.09 million, compared to special items of $647.64 million in the comparable quarter of 2008.
Fourth quarter GAAP results included a tax benefit of $31 million, or 5 cents per share, related to the settlement of a multi-year foreign tax audit. Fourth quarter GAAP net income included a net charge of $59 million from special items, consisting primarily of $43 million of amortization of acquisition-related items, $14 million of stock-based compensation expense, and $2 million in net restructuring and other items.
Revenues for the fourth quarter increased 5% to $637.80 million from $609.96 million in the prior year quarter. Sequentially, revenue climbed 10% from $578.42 million. Analysts expected revenues of $631.54 million for the quarter.
In the preceding third quarter, LSI reported net income of $52 million or $0.08 per share, compared to $11 million or $0.02 per share in the prior year quarter. Third quarter revenues decreased 19% to $578 million from $714 million in the previous year quarter.
Segment wise, fourth-quarter revenue from semiconductors rose to $380.8 million from $373.8 million, while revenue from storage systems climbed to $257 million from $236.2 million a year ago.
Gross margin as a percentage of revenues increased to 41.8% from 37.2% in the similar quarter of 2008. Gross profit for the fourth quarter was $266.85 million, compared to $227.10 million a year ago.
Total cost of revenues declined to $370.95 million from $382.86 million, helped by a drop in selling, general, and administrative expenses. During the fourth quarter, the company's selling, general, and administrative expenses dropped to $78.36 million from $99.61 million last year.
The company had an income from operations of $33.15 million for the fourth quarter, compared to a loss from operations of $594.07 million in the comparable quarter last year, mainly on the absence of a $541.59 million impairment charge related to goodwill and identified intangible assets recorded in the fourth quarter of 2008.
Bryon Look, chief financial officer of LSI, said, "We demonstrated strong fourth quarter performance, with significant improvements in revenues, gross margin, operating income and cash flows. Our storage systems business achieved record quarterly revenues, growing 24% sequentially and contributing to a second-half consisting of two consecutive quarters of double-digit revenue growth."
For fiscal 2009, the company reported a narrower loss of $47.72 million or $0.07 per share from a loss of $622.25 million or $0.96 per share last year. Revenue for the period decreased 17% to $2.22 billion from $2.68 billion in the year-earlier period. On a non-GAAP basis, net income decreased to $232 million or $0.35 per share from $283 million or $0.44 per share.
Looking forward to the first quarter of fiscal 2010, the company expects non-GAAP net income in the range of $0.04 to $0.10 per share. The company projected revenues in the range of $590 million to $620 million for the first quarter. Gross margin is estimated in the range of 39% to 43%.
On a consensus, analysts currently expect the company to report earnings of $0.06 per share on revenues of $580.14 million for the first quarter.
Abhi Talwalkar, chief executive officer of LSI said, "With increasing signs in the fourth quarter that an early-stage recovery of enterprise IT spending is now underway, LSI achieved double-digit sequential revenue growth, with revenues coming in at the high end of our guidance range. With more than 80% of our revenues tied to enterprise technology spending, we are well positioned to benefit as this recovery gains strength going forward."
At the end of the fourth quarter, the company had cash and short-term investments of $962.1 million, compared to $1.12 billion at the end of the prior year quarter.
LSI closed Wednesday's regular trading at $6.00, up $0.26 or 4.53%, on a volume of 13.25 million shares on the New York Stock Exchange. In after hours, the stock lost $0.41 or 6.83%, and trading at $5.60.
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