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LSI Stands By Storage

Present woes aren't dampening its fondness for storage components and subsystems

Despite a multimillion-dollar loss, a 16 percent decrease in revenues, and an 11 percent layoff, LSI Logic Corp. (NYSE: LSI) hasn't soured on its key markets -- especially not on storage.

Indeed, execs on the company's third-quarter earnings call last night said that out of the semiconductor maker's three core segments -- consumer equipment, communications, and storage -- storage will likely rebound first next year.

"Storage components growth will resume in '05," LSI Logic CEO Wilfred J. Corrigan told analysts last night. That, he said, is because storage was first to be affected by the slowdown in spending that's caused inventories to mount in the semiconductor market. In his view, the situation will likely worsen near-term for communications chips, while consumer chip sales will be flat early next year.

The market woes hit LSI hard. Quarterly revenues of $380 million were down 16 percent year-over-year and 15 percent sequentially. GAAP net loss was $282 million, or $0.73 per diluted share, compared with GAAP net income of $7 million or $0.20 per diluted share last quarer (see LSI Reports Q3).

Among other things, LSI's laying off 520 employees in order to improve its cost structure. It's also ditching some earlier forays into areas other than its core markets.

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