LSI Corporation

LSI founded in 1981 and first carrying the name LSI Logic, was one of pioneers in the market of chips for special scopes. For the last decade it had to reorient strategy cardinally: in 2006 the company closed all the factories and announced purchase for 4 bln. dollars of Agere Systems company. As a result of LSI strengthened the direction of standard chips, at the same time continuing to release also chips with a configuration to order. The largest customer of the company — Seagate Technology taking the second place in the world on production of hard drives. The portfolio of LSI includes over 11 thousand requests and patents the USA. For the first nine months of this year revenues of LSI were reduced to the level of year prescription by 0.14 bln. dollars to 1.77 bln. dollars, and profit fell more than twice — from 173.6 million to 79.6 mln. dollars. LSI claim that adverse economic conditions are the reason of falling.

Performance Indicators

2011

The LSI company recorded income for the whole 2011 from the continuing transactions in the amount of 2.04 billion dollars that is 9.3% higher in comparison with 1.87 billion dollars in 2010. The company reported on GAAP to income for 2011 in the amount of 331 million dollars or 55 cents for the stock. The net profit of GAAP in 2010 was 40 million dollars or 6 cents for^[1]

The net profit of GAAP for the whole 2011 included a net annual payment in the amount of 191 million dollars in special points from the continuing transactions connected with acquisitions in 116 million dollars of depreciation, 51 million dollars of remuneration on stocks and 24 million dollars expenses on restructuring and other costs. The net profit of GAAP for the fourth quarter 2011 also including 241 million dollars from discontinued operation, less taxes which included the income of 260 million dollars in size connected with sale of business of external systems of storage. The net profit of non-GAAP for 2011 was 303 million dollars or 50 cents for the stock in comparison with the net profit of non-GAAP for 2010 which made 333 million dollars or 52 cents for the stock.

As a result of merger of LSI very diversified participant of the market of semiconductor products with an annual turnover about 5 bln. dollars is formed. In other words, Avago Technologies will add to the existing activities, including release of solutions for the equipment of wired and wireless networks, new — release of controllers for storage systems. It is expected that the transaction between the companies will be closed in the first half of the year 2014. It was already approved by Boards of Directors of both companies. Of course, it is necessary to get still approval of shareholders of LSI and to undergo the procedure of approval by regulating authorities of the countries adopted in such cases on whose interests it infringes.

History

2013: Avago Technologies purchases LSI for 6.6 billion dollars

Avago Technologies and LSI companies announced conclusion of an agreement under the terms of which Avago will purchase LSI for 6.6 bln. dollars. The last specializes in controllers for flash drives, hard drives and communication networks. According to the announced terms of transaction, Avago pays 11.15 dollars for each stock LSI that is 41% higher than their price as of day of the conclusion of the transaction. The Silver Lake Partners investment fund which will provide Avago of 1 bln. dollars Besides, participates in financing of the transaction the Avago company intends to borrow 4.6 more bln. dollars from bank group.

2011: Engenio is sold to Netapp

In March, 2011 NetApp announced the conclusion of the final agreement about purchase of the producer of external systems of storage Engenio belonging to LSI Corporation which head office is in the city Milpitas, the State of California. The volume of the transaction is 480 million dollars. It is expected that as a result of this transaction already until the end of the second quarter of 2012 financial year the net profit of Netapp will increase counting on an action according to the GAAP standards and additional indicators (not on GAAP). It is supposed that it will strengthen positions of Netapp in such sectors of the market as video surveillance system and capture and processing of video.

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