LSI Corp.'s ($LSI) second-quarter profit soared as the storage chip maker booked a $260 million gain on the sale of its external storage business and posted higher revenue.

The company also projected current-quarter earnings from continuing operations of 11 cents to 17 cents a share on revenue of $535 million to $565 million. Analysts polled by Thomson Reuters were projecting 12 cents and $511 million, respectively.

Shares surged 9% to $7.02 after hours as revenue also topped expectations. The stock is up 7.5% so far this year through Wednesday's close.

LSI has transformed itself in recent years from a diversified chip maker with handset and manufacturing operations, among other offerings, to a provider of chips for networking and storage.

Earlier this year, it agreed to sell its external storage systems business to NetApp Inc. (NTAP) for $480 million, as its board authorized a new stock-repurchase program of up to $750 million.

LSI reported a profit of $293.8 million, or 48 cents a share, up from $7.43 million, or 1 cent a share, a year earlier. Excluding stock-based compensation and other items, per-share earnings from continuing operations were 10 cents, up from 9 cents. Revenue climbed 5.7% to $500.6 million.

The company's April guidance called for a per-share profit of 7 cents to 13 cents on revenue of $465 million to $495 million.

Gross margin was flat at 47.5% as costs edged up.

$LSI indicated +11.49% preopen.