LSI Logic tops 1Q forecasts, sees strong sales ahead

LSI Logic slipped past Street estimates in its first quarter Tuesday, posting a profit of $88 million, or 26 cents a share, on sales of $615 million.

Analysts surveyed by First Call Corp. expected the chipmaker to earn 25 cents a share in the quarter.

LSI (NYSE: LSI) shares closed off 3/4 to 58 ahead of the earnings report.

The $615 million in sales represents a 33 percent improvement from the year-ago quarter when the Milpitas, Calif. company earned $11.2 million, or 4 cents a share, on sales of $464 million.

"Our first quarter profits represented more than a six-fold increase over the year-ago period," said CEO Wil Corrigan in a prepared release. "This positive momentum continued into Q2 and we expect April to be the strongest bookings month ever for the company. We expect strong revenue growth in the second quarter and for the remainder of the year."

Company officials said it expects its communications business to grow about 60 percent this year.

The company also said that it plans to use $25 million in one-time gains from a sale of its venture investments to augment its communications venture fund. LSI said that it has now increased its communications fund to $75 million for investing in emerging communications technologies and promising start-up companies.

Gross profit margins improved in the quarter to 42.4 percent of revenues, up from 34.9 percent of revenues in the first quarter of 1999.

Last quarter, LSI earned $76.4 million, or 47 cents a share, on sales of $584.9 million.

Its shares peaked at 90 3/8 in March after falling to a 52-week low of 16 9/16 last April.

Nineteen of the 22 analysts tracking the stock maintain either a "buy" or "strong buy" recommendation.