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LSI Logic reports double-digit top-line growthThird quarter news release summary
Fourth quarter business outlook
* Generally Accepted Accounting Principles LSI Logic Q3 revenues up 11 percent; storage 2003 revenues on course for $1 billion; first RapidChip products set to ship in Q4 Milpitas, California - October 22, 2003 - LSI Logic Corporation (NYSE: LSI) today reported revenues of $450 million in the third quarter of 2003, an 11 percent sequential increase compared to the $407 million reported in the second quarter of 2003, and a decline of 8 percent compared to the $487 million reported in the third quarter of 2002. Cash and short-term investments totaled $987 million at the end of the 2003-third quarter. The company generated positive operating cash flow for the sixth consecutive quarter and repurchased approximately $172 million in convertible notes, eliminating all current debt. The 2003-third quarter GAAP* net loss was $32 million or 8 cents a diluted share, including a $25 million charge for restructuring. The 2003-second quarter GAAP net loss was $162 million or 43 cents a diluted share. The company reported a GAAP net loss of $28 million or 7 cents a diluted share in the 2002-third quarter. Excluding special items**, third quarter net income was $17 million or 4 cents a diluted share compared to a second quarter net loss of $6 million or 2 cents a diluted share. The company reported net income, excluding special items, of $17 million or 4 cents a diluted share in the third quarter of 2002. "LSI Logic's double-digit top-line growth was paced by our Consumer business, which demonstrated seasonal third-quarter strength," said Wilfred Corrigan, LSI Logic chairman and chief executive officer. "In Communications, our Enterprise Networking business is expected to continue its gradual growth pattern in the fourth quarter, while the WAN market remains under pressure. Our Storage Systems business is expanding and we anticipate strong sequential growth in the fourth quarter. Storage Components recorded key Ultra320 SCSI and RAID design wins in the third quarter and is gathering momentum for the fourth quarter. Combined, our two storage businesses are anticipated to contribute more than $1 billion in revenues this year. "In the fourth quarter, we are forecasting 0-2 percent sequential revenue growth and net income of 3-5 cents per share, excluding special items, and a break-even to a modest net loss on a GAAP basis. Our continuing R&D investments, our flexible manufacturing strategy and our strong cash balance have all enhanced LSI Logic's competitive position heading into the projected industry upturn in 2004." "LSI Logic's first RapidChip™ platform products are scheduled for shipment in the fourth quarter," said Rick Marz, LSI Logic executive vice president of ASIC Technology. "We are confident that our cost sensitive, fast time-to-market RapidChip platform provides us with a significant competitive advantage in the strategic and growing global Platform ASIC market." Last month, LSI Logic signed a definitive agreement to sell the company's Tsukuba, Japan manufacturing facility and extend its foundry usage. The transaction is scheduled to close in the fourth quarter. When this action is finalized, LSI Logic will have completed the consolidation of its internal manufacturing at the company's Gresham, Oregon campus, supplemented by strategic foundry engagements. "During the third quarter, LSI Logic made further strides towards achieving GAAP profitability, generated positive operating cash flow for the sixth straight quarter, reduced operating expenses, eliminated all current debt and maintained nearly $1 billion in cash and short-term investments," said Bryon Look, LSI Logic chief financial officer. "As a result of all of these actions, we have increased LSI Logic's financial strength and strategic positioning in the global marketplace."
Common stock equivalents are excluded from share count in loss periods as a result of their anti-dilutive effect. Capital spending is projected to be around $25 million in the fourth quarter, and less than $75 million in 2003. Fourth quarter depreciation and software amortization is expected to be approximately $37 million. * Generally Accepted Accounting Principles NOTE: The company's financial guidance will be limited to the comments made on today's public conference call and contained in the Fourth Quarter Business Outlook section of this news release. LSI Logic Conference Call Information LSI Logic will hold a conference call today at 2 p.m. PDT to discuss third quarter 2003 financial results. The number is 1-303-262-2175. Internet users can access the conference call by visiting http://www.lsilogic.com/investors. A replay of the call will be available today at approximately 5 p.m. PDT and will be available for 48 hours. The number is 1-800-405-2236 (International, 1-303-590-3000), passcode 555080#. About LSI Logic LSI Logic Corporation (NYSE: LSI) is a leading designer and manufacturer of communications, consumer and storage semiconductors for applications that access, interconnect and store data, voice and video. In addition, the company supplies storage network solutions for the enterprise. LSI Logic is headquartered at 1621 Barber Lane, Milpitas, CA 95035. http://www.lsilogic.com. Safe Harbor for Forward Looking Statements: This news release and the statements by LSI Logic management include forward-looking statements that may involve a number of risks and uncertainties. Readers are cautioned that these forward-looking statements are only predictions and may differ materially from the actual future events or results. Forward-looking statements include projected sequential revenue growth in the fourth quarter, projections of growth in the storage components, storage systems, consumer, communications and enterprise networking businesses. Additional forward looking statements include forecasts of sequential revenue growth, operating expenses, projections of profitability, projections of the company's fourth-quarter business outlook including, net other income, earnings, gross margins, tax provisions, capital spending, depreciation, acquisition-related amortization, restructuring expenses, other special items, common share count, the expected close of the sale of the Tsukuba manufacturing facility and the RapidChip platform generating new business in the fourth quarter. The company's actual results in future periods may be materially different from any performance suggested in this news release. Risks and uncertainties to which the company is subject include, but are not necessarily limited to, fluctuations in the timing and volumes of customer demand, the rate of depletion of customer inventory buildup and the company's achievement of revenue objectives, other financial targets, the development of new products, the timing and the success of new product introductions. Other risks and uncertainties include: the RapidChip platform continuing to generate new business and continuing to find traction with existing customers, the continued availability of appropriate levels of manufacturing capacity, the realization of benefits from the company's strategic relationships, competing technologies, R&D investments, products and other competitive factors and investments and disruptions in general economic activity due to worsening global business conditions or caused by the effects of terrorist activities and armed conflict. The extent to which the company may not realize the cost savings it expects from the reduction in workforce and operating expenses as a result of the sale of the Tsukuba facility may also impact its future performance. The company operates in an industry sector where securities' values are highly volatile and may be influenced by the cyclical nature of the industry, the unpredictability of the economy and other factors beyond the company's control. For additional information, Readers are referred to the documents filed by LSI Logic with the SEC, and specifically the most recent reports on Form 10-K, 10-Q and 8-K. In the context of forward-looking information, reference is made to the discussion of risk factors described in the company's SEC reports filed during the past 12 months.
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