LSI Corporation (LSI) May 22, 2012 11:15 am ET Executives D. Jeffrey Richardson - Chief Operating Officer and Executive Vice President Analysts Blayne Curtis - Barclays Capital, Research Division Presentation Blayne Curtis - Barclays Capital, Research Division
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So LSI, quite simply, is focusing on helping close that gap and we are a company that develops numerous processing capabilities that are very much focused on unique aspects of the storage and networking industries. So we feel very good about the market trends and the market drivers associated with our business.We've been in a big investment cycle in the last 3 to 4 years and really have just started coming out of that investment cycle over the last 12 months or so. And I think the neat thing about it is we're actually starting to see the results of those investments show up in our numbers, right? In Q1, we grew 19% sequentially, 30% year-over-year from a revenue perspective and that's coming off of a 9% growth in 2011 and, actually, 16% growth in the second half of 2011. So there's some momentum that certainly is being built underneath the business. And I'll just point out, not all of that is driven by sort of HDD snapback. There's really a momentum being built in all aspects of our business in terms of the products and share gains. So the results really haven't, I'd say -- well, actually one more thing I'd like to say is we've obviously been focusing on operating margin expansion as well, too. So we really grew our operating margin to 16.4% of revenue in Q1. If you look at our outlook for Q2 and just look at the midpoint that has us – it's around 17.5% operating income. And at our Analyst Day, we basically recommitted a new target for the company with 20% to 22% operating margin range for the company. So a big focus for the management team and, certainly, our path to achieve that is really revenue growth and driving higher mix to higher ASP products along the way as well.
If you look at the product line, they'd say, boy, it's exciting, I have 4 or 5 product lines. We haven't been in a position we've been in ever as a company in terms of leadership of product lines. And so on the HDD side, we've got preamps and SoCs. In general, we feel very good about the competitiveness of those products and that competitiveness along with the desire of each of the HDD vendors to have multiple source of technology has really led us to create some momentum in that business and we grew share from the low 20s a year or so ago to the 30-plus percent range. And we expect to continue to grow share as we ramp new products and add some new customers later this year.On the flash side, very exciting business for us. We acquired SandForce in January. So if you take SandForce's business and flash storage processors, combine it with the efforts that we have at LSI from a custom flash storage processors as well as our PCIe flash efforts, that aggregate business will grow 100%, 150% this year off a base of roughly $70 million, $70-plus million dollars the last year. So a lot of momentum in those businesses and, really, the combination of all those things has really catapulted us into a leadership position in this pretty exciting flash market. And I'm sure there will be some questions on that here in a second. On our Server business, doing a great job in terms of maintaining our share but adding share on the Romley transition from an Intel perspective. We've -- adding more software values so there's ASP uplift as well as, we've got actually new products, right? Whether it's our PCIe flash products getting validated along with the Romley transition, we're adding a product, a custom Gigabit Ethernet Mac/PHY combination that is part of the Intel platform as well. So our content in the Romley platform is actually going up from a previous generation. Read the rest of this transcript for free on seekingalpha.com