Wednesday, January 22nd 2014

LSI Reports Fourth Quarter and Full Year 2013 Results

LSI Corporation (NASDAQ: LSI) today reported results for its fourth quarter ended December 31, 2013. On December 15, 2013, LSI entered into a definitive agreement with Avago Technologies Limited (NASDAQ: AVGO) under which Avago has agreed to acquire LSI for $11.15 per share in an all-cash transaction valued at approximately $6.6 billion. In anticipation of this transaction, which is expected to close in the first half of 2014, LSI will not issue financial guidance for the upcoming quarter or conduct a fourth quarter results conference call. LSI has also discontinued its quarterly dividend and stock repurchases.

"We ended the year on a strong note, with solid quarterly results and the announcement of Avago's proposed acquisition of LSI," said Abhi Talwalkar, LSI's president and CEO. "Our employees did a great job in the quarter and in the year, bringing several exciting new products to market and expanding our capabilities to better serve our growing customer base in flash storage, datacenters and mobile networks."

Fourth Quarter 2013 Financial Highlights
  • Fourth quarter 2013 revenues of $605 million
  • Fourth quarter 2013 GAAP* net income of $0.08 per diluted share
  • Fourth quarter 2013 non-GAAP** net income of $0.20 per diluted share
  • Fourth quarter 2013 operating cash flows of $134 million
  • Fourth quarter operating expenses of $271 million on a GAAP basis and $225 million on a non-GAAP basis
Full Year 2013 Financial Highlights
  • 2013 full year revenue of $2.37 billion
  • 2013 full year earnings per diluted share of $0.22 on a GAAP basis and $0.68 on a non-GAAP basis
  • 2013 full year gross margins of 51.1% on a GAAP basis and 54.9% on a non-GAAP basis
  • 2013 full year operating cash flows of $338 million
  • 2013 year-end cash and short-term investments of $810 million
Additional 2013 Business Highlights
  • Fourth quarter storage revenues were $482 million, networking revenues were $93 million and IP revenue was $30 million.
  • Established position as the No. 2 provider in the rapidly growing PCIe flash adapter market segment with over 100% growth over 2012 and greater than 100,000 lifetime units shipped.
  • Began sampling next-generation SF3700 SandForce controllers, LSI's third generation of flash controllers specifically architected to bring out the full performance of PCIe technology.
  • Strong penetration of ARM-based Axxia products into base stations, including small cells, and into enterprise and datacenter networking applications. Revenue from networking growth areas was up 5% over prior year.
  • Won supplier of the year award at Cisco, with more than 10 unique designs in development.
  • Began shipments of 28nm enterprise SoCs to three of four hard disk drive OEMs, and volume SoCs into a new client customer.
  • Extended SAS and RAID leadership and first to ship 12Gb/s SAS RAID-on-Chip and I/O controller solutions, leading the 6Gb to 12Gb market transition.
  • Fourth quarter 2013 revenues were $605 million, compared to $600 million in the fourth quarter of 2012 and $607 million in the third quarter of 2013.
  • Fourth quarter 2013 GAAP net income was $45 million or $0.08 per diluted share, compared to fourth quarter 2012 GAAP net income of $23 million or $0.04 per diluted share. Third quarter 2013 GAAP net income was $37 million or $0.06 per diluted share.
  • Fourth quarter 2013 GAAP net income included a net charge of $68 million from special items, consisting primarily of approximately $30 million of amortization of acquisition-related items, $21 million of stock-based compensation expense, and $17 million of net restructuring and other items, including merger-related costs.
  • Fourth quarter 2013 non-GAAP net income was $113 million or $0.20 per diluted share, compared to fourth quarter 2012 non-GAAP net income of $101 million or $0.18 per diluted share. Third quarter 2013 non-GAAP net income was $93 million or $0.17 per diluted share.
  • Our tax provision on both a GAAP and non-GAAP basis can vary significantly quarter to quarter based on our profitability in different geographic tax jurisdictions and certain discrete items. We experienced such events in the fourth quarter with the expiration of certain statutes of limitations that resulted in a non-cash net tax benefit of $2 million for the period versus the provision of $7 million we guided to in October.
  • Server and storage semiconductors represented 80% of total revenues for the fourth quarter.
  • Cash and short-term investments totaled approximately $810 million at quarter end. LSI did not repurchase any shares in the fourth quarter.
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