LSI Logic Swings to a Profit

Updated from 4:44 p.m. EST

LSI Logic(LSI) reported a higher-than-expected fourth-quarter profit, as the chipmaker benefited from demand for its storage products.

The Milpitas, Calif., company earned $38 million, or 9 cents a share, in its fourth quarter, compared with a loss of 51 cents a share in the year-ago period. Sales for the quarter rose 21% year-over-year to $506 million, above the company's own guidance and Wall Street expectations.

Analysts polled by Thomson First Call projected that LSI would have $488 million in fourth-quarter sales, near the midpoint of the company's guidance range of $475 million to $500 million. The Street's profit consensus called for 11 cents EPS, excluding a 4-cents-a-share charge related to the company's company's planned sale of its chip manufacturing facility in Gresham, Ore.

Shares of LSI, which finished the day up 3.79% ahead of the earnings release, rose another 3.1% in extended trading to $9.32.

"A strong 2005 performance in our Storage and Consumer businesses was capped off by record fourth-quarter and full-year revenues for our Engenio Storage Group, fueled by the continuing demand for high-performance 4Gb/sec. Fibre Channel systems," said CEO Abhi Talwalkar in a statement accompanying the results.

LSI's storage-driven gains follow strong showings from other storage titans including Seagate(STX) and EMC(EMC), as corporations continue to spend money backing-up data in accordance with various regulatory mandates.

Revenue from LSI's Engenio line of storage systems increased 22.6% year-over-year to $202.9 million in the fourth quarter.

Semiconductor sales jumped 19% to $303.3 million. The company's consumer chips, which are used in DVD recorders and MP3 players, accounted for $80 million of the division's fourth-quarter sales, down 22% due to seasonality.

Gross margin for the quarter was 43.5%.