Updated from 5:14 p.m. EDT

LSI Logic ( LSI) narrowed its third-quarter loss, but posted weaker-than-expected revenue while projecting an equally disappointing top line for the fourth quarter.

Shares of LSI were recently down 56 cents, or 6.6%, to $7.95 in after-hours trading.

The company said late Wednesday that it lost $73 million, or 19 cents a share, due to a $91 million restructuring charge from the planned sale of a chip manufacturing facility.

Excluding the charge, LSI earned $45 million, or 11 cents a share, matching analysts' expectations for the quarter.

While the Milpitas, Calif.-based chipmaker said revenue grew 27% to $482 million, that result fell short of the $489 million expected by a Thomson First Call analyst survey, as well as the $485 million midpoint of the company's own guidance.

In last year's third quarter, restructuring charges resulted in the company posting a loss of $282.4 million, or 73 cents a share, on revenue of $380.2 million.

For the fourth quarter, LSI projected revenue between $475 million and $500 million in revenue, compared with the $507 million expected by analysts. The company expects earnings before items of 10 cents to 12 cents a share, below analysts' consensus prediction of 13 cents a share.

Chips designed for consumer products like cable set-top boxes and DVD recorders, as well as LSI's storage systems subsidiary Engenio Information Technologies, experienced strong growth in the third quarter. But sales of storage-related products, which were the primary engines of growth in the first half of the year, stalled in the third quarter as customers worked off inventory, President and CEO Abhi Talwalkar said in a statement.

Sales of chips used in Sony's ( SNE) PlayStation 2 video-game console, which is at the end of its lifespan, fell to about $15 million in the third quarter -- about half the amount recorded in the second quarter.

The company said it does not expect any PlayStation revenue whatsoever in the fourth quarter. But Talwalkar said in a conference call that LSI had replaced lost video-game revenue with revenue from high-growth products like its audio chip which is used in Apple's ( AAPL) iPod.

Talwalkar acknowledged that he was not satisfied with the company's top-line performance in the third quarter. "We certainly have much more aggressive expectations as we go forward," he said.

LSI's disappointing report comes in the midst of a strategic makeover. In September, the company announced plans to sell its lone chip manufacturing facility in Oregon. The decision to outsource 100% of its chip production is designed to beef up margins while saving the estimated $500 million expense of upgrading the facility to next-generation technology. The company said it is currently in due diligence with numerous parties regarding the sale of the facility and has several letters of intent in hand. In addition to this quarter's restructuring charge, LSI will incur charges of about $3 million for the next three quarters.

LSI also recently unveiled an internal reorganization, placing the company's focus on consumer products, custom integrated circuits and storage platforms and products. Communications chips for routers and switches, once among LSI's core business segments, were conspicuously absent from the new company organization. While LSI has not explicitly stated that it is exiting communications, the company appears to be de-emphasizing its presence in the highly competitive market.