QLogic Swoons On Weak Q2 Outlook

QLogic (QLGC) shares were down sharply Friday morning following a disappointing outlook for the company’s fiscal second quarter ending in September. The company Thursday night reported revenue for the fiscal first quarter of $139.8 million, with EPS of 12 cents GAAP, 20 cents non-GAAP. EPS was in line, but revenue was light.

The real trouble came in the post-announcement conference call, in which the company projected revenue of $137 million to $141 million, with non-GAAP EPS of 17-19 cents. The Street has been expecting $153.4 million and 23 cents.

Caris & Co. analyst Shebly Seyrafi Friday morning cut his rating on the stock to Average from Above Average, citing loss of market share in the host bus adapter segment, disappointing guidance, declining margins and the revenue miss.

Laura Conigliaro, an analyst at Goldman Sachs, who has a Neutral rating on the stock, wrote a scathingly negative assessment of the company Friday morning.

“QLogic’s model reset raises enough questions that it should alleviate any material reason to rush into the stock,” she writes. “Calling QLogic’s HBA problems secular and due to virtualization may be partly true but it overlooks the current share loss to Emulex as it regains lost ground.” She cut her EPS estimates to 80 cents a share from 95 cents for the March 2008 fiscal year, and to 88 cents from $1.13 for fiscal ‘09.

QLGC 1-yr chart: