(Reuters) - LSI forecast current-quarter revenue above expectations as it sells more controller chips for hard-drives and ramps up sales of flash storage products, sending its shares higher after hours.
Last month, an upbeat LSI increased its forecast for first-quarter results, saying a hard-drive industry hurt last year by flooding in Thailand was recovering faster than expected.
Chief Executive Abhi Talwalkar told Reuters that sales of flash-storage products are growing quickly following LSI's January acquisition of high-end sold-state storage provider SandForce.
"Some of our strength in Q1 in beating the updated guidance was aided by strong demand for flash storage processors into (solid-state drives)," Talwalkar told Reuters.
He said an upcoming wave of super-thin "Ultrabook" laptops, with "instant on" and other features made popular by tablets, will push demand for solid-state storage further.
Demand for personal computers, shaken by uncertain economies and a growing preference for tablets, has been better than expected.
A rebound in the hard-drive industry as key customer Seageate and others resume manufacturing has helped boost LSI growth in recent quarters.
"The hard drive business eventually will stabilize, a lot of the upside of the recovery is probably going to slow down at some point. That's probably going to happen later this year, but they have other growth drivers that should offset it," said Daniel Amir, an analyst at Lazard Capital.
LSI posted first-quarter revenue of $622 million and net income from continuing operations of $75 million, or 13 cents a share, fueled by a recovering hard-drive market and higher flash controller sales.
The company, which counts hard-drive disk maker Seagate as a key customer, estimated current-quarter revenue would be between $630 million and $670 million.
Analysts were expecting revenue of $600 million for the first quarter and $620 million for the second quarter, according to Thomson Reuters I/B/E/S.
In the year-ago quarter, LSI posted revenue from continuing operations of $473 million and net income of $19 million, or 3 cents per share.
Excluding items, the company earned 20 cents per share from continuing operations in this year's first quarter. Analysts on average expected 14 cents.
LSI's shares rose 2.7 percent to $8.66 in after-hours trading, after closing up almost 5 percent at $8.43 on the New York Stock Exchange.
Reporting By Noel Randewich; Editing by Phil Berlowitz, Bernard Orr