SAN FRANCISCO—LSI Corp. Wednesday (July 28) blamed isolated customer inventory adjustments for modest second quarter revenue growth that resulted in the company coming up short of analysts' expectations for sales.
LSI (Milpitas, Calif.) reported second quarter revenue of $639 million, up slightly from $637 million in the first quarter and up 23 percent compared to the second quarter of 2009. LSI reported a second quarter net income in accordance with generally accepted accounting principles (GAAP) of $7 million, or 1 cent per share, compared to a GAAP net loss of $61 million in the year-ago quarter and a GAAP net income of $23 million in the previous quarter.
Abhi Talwalkar, LSI president and CEO, told analysts in a conference call following the earnings report that the company outperformed some of its markets in the first quarter and is seeing inventory adjustments from several customers in the second and third quarters as a result. LSI also saw a softening of demand among hard disk drive customers late in the second quarter, Talwalkar said.
LSI believe those inventory issues "have been worked through in Q2 and what's remaining will work through in Q3," Talwalkar said.
LSI's second quarter GAAP net income included a $64 million net charge for special items, including $40 million in amortization of acquisition-related items and $18 million in stock-based compensation, the company said.
On a pro forma basis, excluding charges, LSI reported a net income of $71 million, or 11 cents per diluted share, down from $92 million in the first quarter but up from $7 million in the second quarter of 2009.
LSI's first quarter GAAP and pro forma net incomes were skewed by a $19 million tax benefit, the company said.
Consensus analyst expectations called for LSI to post revenue of $654 million and a pro forma net income of 11 cents per share, according to Yahoo Finance.
For the third quarter, LSI said it expects revenue to be between $625 million and $665 million. The company said it expects to report a net income for the quarter of about $3 million.
"While improving end market demand for enterprise IT products continues to bode well for us, our outlook for the third quarter is one of tempered optimism as macro-economic conditions appear to be somewhat fluid at the present time," Talwalkar said.