Oracle executives say they killed their HDS deal because they don’t make enough money selling other vendors’ storage, which doesn’t bode well for LSI.

But LSI CEO Abhi Talwalkar says he’s optimistic about continuing with Oracle. During LSI’s earnings call Wednesday evening, Talwaker even talked about expanding the partnership.

“We are pleased with our competitive position at Oracle,” he said. “Oracle recently posted a pdf on [its] website to address the partnership with Hitachi Data Systems. We believe there have been positive developments for LSI, including the termination of the HDS relationship. This will give LSI more room to grow, and Oracle also mentions support for technology partners associated with the [Sun StorageTek] 6780 system and 6000 series. which is all leveraging LSI system technology.”

Oracle hasn’t said anything publicly either way about LSI. During Oracle’s earnings call last month, CEO Larry Ellison says OEM relationships with HDS and Symantec Veritas backup software have ended but did not mention LSI. In explaining the HDS and Symantec decisions he said “we add no value so we are out of that business.” He did mention expanding the SunStorageTek 7000 midrange storage as well as high performance and high end servers platforms, but not the 6000. “Where Sun was specifically a distributor of someone else’s intellectual property and lost money doing it, we are out of that business,” Ellison said.

But what if Oracle/Sun is making money on LSI’s storage? LSI reported its second straight strong quarter ifor storage system sales with revenue of $221 million, up 40% from a year ago. Besides Oracle, LSI’s OEM deals include midrange storage systems for IBM and entry-level enclosures for Dell and other smaller vendors.

Talwaker also said LSI will launch a new 6 Gbps SAS entry level platform with up to four times performance and twice the capacity of its current platform in the second half of this year.