10th May 2007

LSI Corp. may exit Consumer Electronics Biz

According to a news report, LSI Corp. is considering whether or not to continue its Consumer Electronics (CE) business. It was however clarified that this would not impact the company’s focus on its chips for mobile phones.

This comes closely on the heels of the revelation by LSI Corp. that it repurchased 5 million shares, worth $43 million, of its common stock in the past couple of days following its stock tumbling more than 12%; investors sold off the stock following the chipmaker’s April 25 earnings report, in which LSI said its sales for the quarter ending in June would fall $100 million of Wall Street’s expectations

While 60% of the revenue of the new combined company ((LSI Logic finalized its merger with Agere Systems in April and the new entity is called LSI Corp.) continues to come from its storage chips and systems business, does it mean an inclination of LSI Corp. towards the strengths of Agere Systems i.e. communications, networking and mobile phone industry?

While CE is generally considered to be a major revenue generator, it is not exactly a smooth sailing - decreasing market window, multiple features, growing design & packaging complexity, falling ASPs and convergence are some of the existing challenges

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