Seeking Alpha

Soft guidance sinks QLogic; Emulex adds to losses

  • QLogic (QLGC -7.9%) guided on its FQ4 CC (transcript) for FQ1 revenue for $116M-$122M. Thought that range is above a $114.8M consensus, it assumes $11M in revenue from Broadcom's NetXtreme II Ethernet controller business, whose acquisition was announced in March and hasn't yet been factored into all analyst estimates. EPS guidance of $0.17-$0.22 is largely below a $0.22 consensus.
  • In addition, QLogic is guiding for FY15 (ends March '15) revenue to grow 10%-12%, after factoring a $60M contribution for the Broadcom unit. A Stifel analyst observes this implies a 2% revenue drop for the rest of QLogic's business at the midpoint. the consensus is for 2.3% growth. A Piper analyst observed the guidance implies a 4%-6% organic revenue drop if one also backs out Brocade's adapter card business (acquired in January).
  • Emulex (ELX -5.6%), which crashed yesterday after providing weak guidance (and took QLogic and others lower with it), added to its losses today. Shares are down 35% over the last two days.
  • Like Emulex, QLogic admits the Fibre Channel storage market is weak - it estimates a 6%-7% market decline. The company is counting on IP/Ethernet opportunities and growing storage ASIC sales to help offset the drop. The latter business, boosted by an FQ4 ramp at a major storage OEM, is growing at a 10% clip.
Comments (1)
  • jzut
    , contributor
    Comments (43) | Send Message
     
    Traded Q a few times before. Always made a few bucks. Picked up a couple hundred @ 9.91. Usually below 10 is a good start. But patience is a necessity.
    2 May, 04:54 PM Reply Like
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