LSI Logic Storage Systems has been successful selling its high-performance, low-cost storage arrays to OEMs. It has reported six straight quarters of year-over-year revenue growth. Its third-quarter revenues of $104 million represented 23 percent of LSI Logics overall revenue. For the first nine months of 2003, the storage systems segment generated $305 million in revenue, or 25 percent of the overall company revenues.
LSI Logic Storage Systems increased revenue by 20 percent in the third quarter and by 33 percent for the first nine months of the year. That follows a 59 percent increase in 2002 over the previous year.
When announcing third-quarter revenues in October, Corrigan said the storage systems group was on track for a record year in 2003 and forecast a record fourth quarter.
LSIs executives say its growth drivers have been the industry trend toward modular storage and the companys successful channel strategy over the last 18 months. LSI has OEM deals with IBM Corp. (NYSE: IBM), Storage Technology Corp. (StorageTek) (NYSE: STK), the Teradata Division of NCR Corp., and Silicon Graphics Inc. (SGI) (NYSE: SGI), with IBM generating far more revenue than any of the others. One challenge the new company will face is to diversify its customer base to make it less reliant on IBM (see IBM Kicks Up Midrange Storage).
We expected this to be in the works for a long time, says John McArthur, group VP of storage research at IDC. I think LSI rightfully believed they werent getting adequate public attention for the size of their business. And the methods and investments of a semiconductor business are different than the methods and investments of a storage systems business.
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