QLogic (QLGC) is expected to report Q1 earnings after the market close on Thursday, July 26, with a conference call scheduled for 5:00 pm ET.
The consensus estimate is 27c for EPS and $131.27M for revenue, according to First Call. QLogic management expects Q1 revenue in the range of $130M-$135M. The company expects host and network products to increase 1.0% annually. Revenue from Silicon Products is expected to be approximately $9M. Gross margin is forecasted to be approximately 68%, while QLogic expects to incur operating expenses of $59M. Non-GAAP EPS is expected in the range of 26c-28c.
Stephens feels that QLogic should be able to comfortably beat the Street estimate given the opportunity for cost controls in operating expense line. Despite the sale of the InfiniBand business, which was roughly 12% of revenues, QLogic guided for opex to be relatively flat. Stephens feels as though the opportunity to control expenses given the sale of the business makes an EPS beat in Q1 possible, by about 2c. For Q2, the Street expects QLogic will guide to non-GAAP EPS of 30c on revenues of $138.5M, or an increase of 5.1% sequentially. Overall, given the macro environment and slow proliferation of Romley based servers, Stephens feels that the company could come in at around 3%-4% growth, but make the 30c consensus given the operating leverage due to the sale of the IB business. Given that QLogic is tied to the enterprise spend, which appears to be lackluster and clouded by macro, Stephens prefers to be on the sidelines with an Equal Weight rating.