LSI Logic Edges Higher Despite Warning

Chipmaker LSI Logic (NYSE: LSI) rose to US$16.93, up 62 cents, in morning trading on Monday, even after the company lowered itsoutlook for the first quarter ending in March.

Citing “the adverse economic climate and a widespread inventory correctionin the communications and storage markets,” LSI said it expects earnings pershare to total just 3 cents, down from an earlier projected 21 cents and ayear-earlier level of 26 cents.

LSI said it now expects a 30 percent decline in revenue from the $751million reported for the fourth quarter, instead of the 12 percent droppreviously predicted.

“The sharp decline in U.S. customer end-demand coupled with a widespreadinventory correction in the supply chain has prompted us to lower ourguidancefor the first quarter,” said chairman and chief executive officer Wilfred J.Corrigan.

“We are confident that revenue growth will resume when the overall economicoutlook improves,” Corrigan said. “We do not have sufficient visibility atthis time to accurately predict the timing for the resumption of growth.However, we believe that communications and storage will be the growthdrivers when the industry rebounds from this period of economic decline.”

LSI said it is taking a “series of cost-reduction measures” to bringoperating expenses in line with revenue projections and improveprofitability without harming the company’s competitive position.

In January, LSI reported fourth-quarter revenue of $751 million, up just 3percent from the third quarter, and income before special items of $116million, or 34 cents per share. At the time, the company said it was able togenerate record results despite a slowing economy.

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