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.

From other sites
Comments (1)
  • jzut
    , contributor
    Comments (152) | 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 2014, 04:54 PM Reply Like
DJIA (DIA) S&P 500 (SPY)
ETF Screener: Search and filter by asset class, strategy, theme, performance, yield, and much more
ETF Performance: View ETF performance across key asset classes and investing themes
ETF Investing Guide: Learn how to build and manage a well-diversified, low cost ETF portfolio
ETF Selector: An explanation of how to select and use ETFs