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QLogic (QLGC) is expected to report Q4 earnings after the market close on Thursday, April 29, with a conference call scheduled for 5:00 pm ET.

Guidance

The consensus estimate is 26c for EPS and $143.26M for revenue, according to First Call. Guidance for Q4 from management calls for Q1 EPS of 24c-26c on revenue of $140M-$144M.

Analyst Views

Goldman believes QLogic’s Q4 revenue should come in at the upper end of its target range, with the bias to the upside. The upside should be driven by the enterprise server refresh cycle and strength in overall storage demand. Goldman is estimating 26c / $143.5M, in-line with consensus. OLogic's host revenue to come in above Goldman's estimate of $106.2M, up 20% year-over-year and down 4% quarter-over-quarter, given the company's out-sized exposure to x86 servers, stronger-than-expected growth in that segment. Another opportunity for incremental revenue could come from QLogic's new OEM relationship with Hewlett-Packard (HPQ) in storage switching. At the same time, Goldman feels lower sequential volumes and a weaker mix, of more mezzanine cards vs. full board HBAs and a lower contribution from royalty revenue, will likely cause gross margins to tick down qoq. FY year-end costs will likely drive opex up sequentially, causing non-GAAP operating margins to decline roughly 350 bp qoq to their estimate of 26.9%. Looking forward: Goldman expects to see improving enterprise demand for servers and networked storage in the seasonally stronger June quarter, enabling QLogic to target revenue in the range of $146M-$150M, up 2%-5% from the firms Q4 estimate. Goldman's Q1 revenue estimate is in-line with the Street at $147M. QLogic’s Host segment should benefit from the ongoing server refresh cycle, with potential for higher attach rates to new, higher performance x86 systems, while the Network segment should benefit from increasing traction at HP. Goldman expects gross margins will be flattish to slightly up qoq on improving volume. Operating expenses are expected to tick down qoq, driving operating margins up and earnings close to Goldman's estimate of 28c. Consensus is at 27c.

Source: Earnings Preview: QLogic