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LSI To Sell External Storage Systems Business To NetApp For $480 Million

"NetApp will build upon the success of the Engenio storage platform and OEM business model to expand our total addressable market and extend our market reach," said Tom Georgens, NetApp president and CEO. "We're excited about the talented team that will join NetApp and the valuable OEM partner relationships we're committed to supporting and making successful."

Talwalkar added, "As the market requirements for external storage systems continue to trend toward more comprehensive solutions and offerings, greater investment levels are required to enable additional growth opportunities. We believe that NetApp is well positioned to provide the needed technologies and scale to grow the external storage systems business and better serve our customers going forward."

About the Transaction

As a result of the sale, LSI expects to eliminate $35 million to $40 million per quarter of operating expenses upon closing of the transaction.

LSI expects the combined effect of the transaction, its associated expense reduction, the new stock repurchase program and anticipated strong revenue growth in its semiconductor business going forward to be slightly dilutive to 2011 earnings per share (EPS) and neutral to accretive to 2012 EPS.

The company does not expect to incur any material tax obligations in connection with the transaction and expects to provide additional financial information after closing the transaction.

The transaction is expected to close in approximately 60 days, subject to the satisfaction of customary closing conditions and regulatory approvals including those required by the Hart-Scott-Rodino Antitrust Improvements Act.

LSI Stock Repurchase Program

Stock repurchases under the newly authorized program are expected to be funded from the proceeds of the sale of the external storage systems business, available cash and short-term investments.

"Our business is tracking consistent with the guidance we provided in January, and we're confident that the steps we are taking today will position us to achieve our business model operating margin target by the end of 2011," said Bryon Look, LSI CFO and chief administrative officer. "This new repurchase program underscores our belief in the future earnings power of LSI as a pure-play semiconductor company."

LSI Conference Call Information

LSI will hold a conference call today at 5 p.m. EST to discuss the transaction. Internet users can access the conference call at http://www.lsi.com/webcast. Subsequent to the conference call, a replay will be available at the same web address.

Forward-Looking Statements: This news release contains forward-looking statements that are based on the current opinions and estimates of management. These statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated in the forward-looking statements. Factors that could cause LSI's actual results to differ materially from those set forth in the forward-looking statements include, but are not limited to: a delay in the closing of the sale of our external storage systems business to NetApp; our ability to eliminate costs related to our external storage systems business; our ability to repurchase our common stock at prices we believe to be advantageous; our reliance on major customers and suppliers; our ability to keep up with rapid technological change; our ability to compete successfully in competitive markets; fluctuations in the timing and volumes of customer demand; the unavailability of appropriate levels of manufacturing capacity; and general industry and market conditions. For additional information, see the documents filed by LSI with the Securities and Exchange Commission, and specifically the risk factors set forth in the company's most recent reports on Form 10-K and 10-Q. LSI disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

About LSI

LSI Corporation (NYSE: LSI) is a leading provider of innovative silicon, systems and software technologies that enable products which seamlessly bring people, information and digital content together. The company offers a broad portfolio of capabilities and services including custom and standard product ICs, adapters, systems and software that are trusted by the world's best known brands to power leading solutions in the Storage and Networking markets. More information is available at www.lsi.com.

About NetApp

NetApp creates innovative storage and data management solutions that accelerate business breakthroughs and deliver outstanding cost efficiency. Discover NetApp's passion for helping companies around the world go further, faster at www.NetApp.com.

Editor's Notes:
  1. All LSI news releases (financial, acquisitions, manufacturing, products, technology, etc.) are issued exclusively by PR Newswire and are immediately thereafter posted on the company's external website, http://www.lsi.com.
  2. LSI and the LSI & Design logo are trademarks or registered trademarks of LSI Corporation. All other brand or product names may be trademarks or registered trademarks of their respective companies.

SOURCE LSI Corporation

Copyright 2011 PR Newswire. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
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