UPDATE: Goldman Sachs Downgrades LSI to Neutral on Weak Enterprise Spending, PC Deterioration

In a report published Wednesday, Goldman Sachs analyst James Schneider downgraded the rating on LSI Corp.

from Buy to Neutral, and slightly lowered the price target from $8.00 to $7.00. In the report, Schneider noted, “We still believe that LSI's growth will be driven by design wins in SSDs and networking. However, we did not fully anticipate two key factors that we think will make it difficult for LSI to beat Street estimates: (1) Weak enterprise spending, which is negatively impacting enterprise servers/storage and PCs (60% of sales); (2) continued deterioration in PCs – although LSI's notebook HDD exposure is small, the decline in desktops (down 13% yoy in 1Q) is pressuring the HDD business. Since added to the Buy List on Aug. 6, 2012, LSI is down 11% vs. the S&P 500 up 14%. Over 12 months, LSI is down 18% vs. the S&P 500 up 14%.” LSI Corp. closed on Tuesday at $6.46.