Earnings Preview: QLogic

QLogic (QLGC) is expected to report Q1 earnings Monday, July 18, after market close, with a conference call scheduled for 5:30 pm ET.

Guidance

The consensus estimate is 29c for EPS and $161.92M for revenue, according to First Call.

Analyst Views

The June quarter is a non-issue as the company pre-announced positively on July 9. QLogic pre-announced better June quarter results of 30c to 31c, on revenue of $166M to $168M. "Our revenue performance was driven by sequential growth of approximately 9% for our Host Products and approximately 8% for our Network Products from the previous quarter," said QLogic CEO H.K. Desai.

At that time, Pacific Growth upgraded shares after raising its estimates to reflect positive channel checks and the company's pre-announcement.

Wachovia said that while it would view IBM's lingering System x (Windows/Linux) server weakness as a negative, it should be offset by continued double digit growth in blades (albeit slowing to 14% YoY growth from 31% YoY in the prior quarter). The firm said QLogic remains well positioned within IBM's Blade business, where Wachovia estimates as much as a 70% share for QLogic.

Citigroup's concerns for QLogic are: market risk; HBA industry growth rates and tough CY09 comps.

Key issues for the conference call include: Forward guidance; commentary on OEM customers, Hewlett-Packard (HPQ), Sun Microsystems (JAVA) and Dell (DELL) as well as the x-Series within IBM (IBM).