LSI Rallies Despite Warning of Q2 Loss

LSI Logic (NYSE: LSI) was at US$19.73, up 23 cents, in late-morning trading Wednesday, after reporting first-quarter 2001 results that were in line with expectations, while at the same time warning of an expected second-quarter loss.

Earlier in the morning, the shares slipped as low as $18.83.

Chairman and chief executive officer Wilfred J. Corrigan said that results for the quarter ended March 31st were hurt by “the abrupt decline of the U.S. economy,” weak demand and inventory buildup.

“While our visibility is limited, there are indicators that point to the resumption of revenue growth in the second half of the year,” Corrigan said.

The Milpitas, California-based maker of integrated circuits and storage systems said that revenue for the first quarter fell 16 percent from a year earlier, to $517 million.

Income before amortization and special items fell to $9.5 million, or 3 cents per share, from $88 million, or 26 cents, a year earlier. The company posted a net loss of $31.25 million, or 10 cents per share, compared with net income of $86.24 million, or 28 cents.

The company’s recent agreement to acquire C-Cube Microsystems for $878 million in stock, Corrigan said, will expand LSI’s presence in global communications and consumer markets.

LSI said that it expects second-quarter revenue to drop about 10 to 15 percent from first-quarter levels, with a loss before items of 7 cents per share.

The company also plans to take a $120 million to $150 million charge to results for the quarter to cover the recently announced closing of its Colorado Springs, Colorado manufacturing plant. Other charges will also surface in the second and third quarters, LSI said.

LSI said earlier this month that 500 people will lose their jobs as a result of the Colorado plant closing. The company aims to consolidate manufacturing at its two main plants: in Gresham, Oregon and Tsukuba, Japan.

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