LSI ($19 -21) P/E 52 Sees Revenue Growth In Fourth Quarter; Shares Rise
A Wall Street Journal Online News Roundup
NEW YORK -- LSI Logic Corp. saw its shares climb Friday after the communications-chip maker said it expects business to bottom out in the current quarter and revenue to grow in the fourth quarter.
In 4 p.m. trading, LSI shares were up $1.70, or 8.9%, to $20.85 on the New York Stock Exchange.
Bear Stearns & Co. analyst Charles Boucher upgraded his rating on LSI's stock to "buy" from "attractive" on the company's optimistic outlook. Mr. Boucher said he believes LSI's customers have been working off their inventories of chips and are using them faster than they have been ordering them.
The analyst noted in a research note that LSI's exposure to consumer, enterprise, server and storage sectors is a positive because those markets are likely to recover sooner than the networking and telecommunications segments, in which LSI also is a player. The analyst added that LSI, of Milpitas, Calif., should be "well-positioned" to benefit from the upcoming semiconductor upturn.
Late Thursday LSI posted a second-quarter net loss of $312.5 million, or 91 cents a share, compared with year-earlier net income of $70.6 million, or 21 cents a diluted share. Excluding charges, LSI lost $20.9 million or six cents a share, one cent better than Wall Street's expectations. Revenue fell 28% to $465.2 million.
The semiconductor maker also warned that third-quarter revenue would fall 10% to 15% from the second quarter, representing a loss of about 31 cents a share, and that gross margin would be in the 30% to 32% range, down from the second quarter's 38.8%.
While many industry watchers agreed that LSI's revenue outlook for the third quarter is steeper than expected, the fact that the company is optimistic for a third-quarter bottom in all its segments except for networking was something to cheer about.
Tim Mahon, an analyst at Credit Suisse First Boston, said the company is ready "for the inevitable upturn, with a much stronger balance sheet than in previous downturns." The analyst noted, however, that the stock is a "bit rich" at current levels. He said he would advise investors to stay on the sideline with an "eye towards lower entry points."
LSI supplies chips for broadband, data networking, communications, wireless and set-top boxes. The company also provides chips and boards for network computing and supplies storage networks for enterprises.
When it reported first-quarter results in April, LSI said that there were indications that revenue growth would resume in the second half of the year |
