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Chip designer LSI (NYSE: LSI ) had a very good day on Wednesday. First, the company bumped up its first-quarter revenue guidance by 5%, along with a fresh earnings outlook. Management sees non-GAAP earnings per share landing between $0.12 and $0.16, smashing the $0.12 Wall Street consensus. Unexpected strength in the market for hard-drive controllers drove this very positive update.
Then Nomura analyst Romit Shah poured gasoline on the fire. In a note to clients, he says that LSI's strength probably is bad news for Marvell Technology (Nasdaq: MRVL ) because LSI seems to be stealing market share from its only serious rival in the hard-drive space.
LSI's share prices jumped more than 7% on this one-two combination, while Marvell trailed the flat market on Wednesday. In support of Shah's opinion on the recovery of hard-drive sales, both Western Digital (NYSE: WDC ) and Seagate Technologies (Nasdaq: STX ) received 2% haircuts. Not that Mr. Market has access to any better or more correct information than top analysts or anything, but the wisdom of the crowd clearly agrees with Nomura here.
About four months ago, I complimented LSI for its crisp execution while celebrating the forward-thinking move to acquire solid-state storage specialist Sandforce. This week's news underscores my view of this high-performing management team, and I'm confident that my bullish CAPScall on LSI will pay dividends for years to come.
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