Updated from 4:42 p.m. EDT

LSI Logic ( LSI) boosted first-quarter profit as the chipmaker reported its first financial results since announcing a new corporate focus.

Sales for the three months ended March 31 increased 6% year over year to $476 million, just slightly below the midpoint of the company's guidance.

Sales were down 6% sequentially, in keeping with the seasonal slowdown described by the company as the toughest quarter of the year.

Analysts were looking for $481 million in revenue.

LSI earned $19 million, or 5 cents a share, compared with the $5 million, penny-a-share profit the company posted a year ago.

Excluding special stock-based compensation expenses and certain acquisition-related charges, LSI earned 11 cents a share, in line with its guidance and analysts' expectations.

CEO Abhi Talwalkar said that strong demand for LSI's storage chips and systems helped offset the seasonal sales decline.

Revenue from storage systems jumped 22% year over year to $178 million, the second-highest amount in company history. Overall semiconductor sales dipped 2% year over year, to $298 million, due to a slowdown in the video-game industry.

In March, LSI announced that it would focus exclusively on the storage and consumer markets .

Talwalkar stressed that LSI remained fully committed to the consumer market despite the recent news that PortalPlayer's ( PLAY) chip will not be used in Apple Computer's ( AAPL) next flash-based iPod. LSI provides the silicon component of Portal Player's iPod chip.

He said the company was still assessing the impact of the PortalPlayer news, noting that the "dust has not completely settled." While the news would not affect financials in the current quarter, Talwalkar said the economic impact could be as much as $40 million in revenue in the second half of the year.

As for LSI's other consumer businesses, Talwalkar said the company expected strong demand for recordable DVD players that use LSI chips, with falling prices expected to spur consumer demand throughout 2006.

Meanwhile, increasing corporate IT spending in the second half of the year, coupled with industrywide technology transitions, should help LSI's storage sales.

"The fundamental near-term and long-term markets that are demand-drivers for our business remain strong," said Talwalkar.

LSI projected revenue in the current quarter of $470 million and $500 million, with EPS between 11 cents and 13 cents, excluding stock compensation and other special expenses.

On that basis, analysts polled by Thomson First Call were expecting the company to earn 12 cents a share on revenue of $496 million.

Shares of LSI were up 13 cents at $10.20 in extended trading, after closing the regular session off 2 cents.

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