LSI CEO Sees Benefits From Tablets; Correction Over For Company
December 14 2010 - 12:55PM
Dow Jones News
LSI Corp. (LSI) doesn't supply chips for tablets, but the
semiconductor maker is still benefiting from increased demand for
the mobile devices.
Abhi Talwalkar, chief executive of the company that supplies
chips for storage and networking, said during an interview with Dow
Jones Newswires that while tablets are likely to hurt PC sales
somewhat going forward, he isn't concerned as LSI also provides
chips for infrastructure like networking and is expanding more into
flash technology.
"The more [mobile] products and apps there are, the more they
drive the need for networking, storage and servers," he said.
"We're behind the scenes of the big push for mobile Internet."
In addition, Talwalkar said PC demand is generally stable, and
there is a tightening in the supply of hard-disk drives.
LSI went through a transformation in recent years, turning
itself from a diversified chip maker with handset and manufacturing
operations, among other offerings, to a provider of chips for
networking and storage, including hard-disk drives. Its storage
systems business has helped it report stronger results of late.
Talwalkar said that the company is about a quarter ahead of
fellow chip makers in the industry's recent correction. Many
companies have warned of weakening demand in the second half of the
year, but Talwalkar said LSI went through a slight correction in
the second and third quarters due to inventory adjustments.
"We might have been the canary in the coal mine in the second
quarter," he said. "From our perspective, the correction is behind
us, and it's supported by the fact we're guiding growth for the
fourth quarter from a midpoint standpoint."
Meanwhile, Talwalkar said LSI's first quarter could come in a
little better than its normal seasonal decline of 8% to 10% as
results bounce back from a muted fourth quarter, which typically
marks the peak.
"If the fourth quarter is down or if it's a muted seasonal up,
we may possibly, as a result, experience a muted seasonal down in
the first quarter," he said. But Talwalkar cautioned that he wasn't
changing guidance for the fourth quarter or making projections for
the first. The company will report its next quarterly results in
late January and will provide details at that time.
In addition, Talwalkar said business spending on IT should
continue to be "fairly positive" in 2011 as companies feel better
about the economy's stability, the fear of a double dip has
subsided and businesses have a lot of cash.
"We're probably in the best position the company has been in for
a very, very long time," Talwalkar said. "And that's in terms of
our balance sheet, product competitiveness, pipeline and what we
expect to do in terms of financial performance over 2011 and
2012."
LSI shares, down 1.7% this year, were flat at $5.91 in recent
trading.
-By Shara Tibken, Dow Jones Newswires; 212-416-2189;
shara.tibken@dowjones.com
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