Tue, Sep. 15, 10:54 AM
- QLogic (QLGC +0.9%) discloses it launched a restructuring plan on Sep. 2. The number of job cuts involved hasn't been discloses; QLogic does say it expects $5M-$6M in pre-tax cash charges.
- The company stated on its July 30 FQ1 call it plans a restructuring that aims to lower its FY16 operating expenses to $200M. With Fibre Channel and (to a lesser extent) Ethernet product sales under pressure, QLogic is expected by the Street to see its revenue drop 14.7% Y/Y in FY16 to $443.7M.
Mon, Aug. 31, 10:39 AM
- Summit Research's Srini Nandury, upgrading QLogic (QLGC +2.4%) to Buy and hiking his target by $2 to $13: "Qlogic has pulled back significantly from early June highs (down 37% versus S&P of down 4%) after the company preannounced an earnings shortfall. We believe Qlogic kitchen-sinked estimates and we are optimistic the company will at least meet (likely beat) the lowered bar for the year, which is enough for the stock to work."
- He adds QLogic's core Fibre Channel connectivity market (under pressure recently) is "fairly stable," and expects seasonality, Intel's Grantley server CPU platform, cost cuts, and buybacks to support estimates. "In addition, any improvement in Ethernet business will also aid the stock given that the company inherited a fairly robust portfolio from Broadcom ... Finally, gross margin improvement in its Ethernet business due to manufacturing consolidation and design for costs and operational improvements should at least contribute 800-1200bps improvement in Ethernet margins (with part of the improvement showing in F2016). "
- The upgrade comes 10 days after QLogic announced Prasad Rampalli has resigned as CEO, and that CFO Jean Hu will serve as acting CEO.
Fri, Jul. 31, 12:46 PM
Fri, Jul. 31, 10:18 AM
- Though officially missing consensus, QLogic's (NASDAQ:QLGC) FQ1 revenue ($113.4M) was slightly above the guidance ($113M) provided in its July 9 warning. Cost cuts EPS ($0.19) top guidance ($0.16-$0.17).
- However, on its earnings call (transcript), the Fibre Channel/Ethernet connectivity hardware vendor guided for FQ2 revenue of $98M-$106M and EPS of $0.10-$0.16, well below a consensus of $127.1M and $0.23.
- QLogic notes it saw weak demand from several Fibre Channel server and storage OEM customers in FQ1 due to "weaker-than-expected traditional enterprise server and storage system shipments." Cloud storage demand has been weighing on traditional enterprise sales - QLogic plans direct more resources towards cloud opportunities.
- The company also forecasts Ethernet revenue will drop Q/Q in FQ2 thanks to a $3M-$4M inventory buildup at a major OEM, and the $3M impact of a transition at an OEM from Ethernet ASICs to adapters. The transition to adapters (higher ASPs) is expected to boost sales in the second half of FY16.
- In response to the top-line pressures, QLogic is planning a restructuring that aims to lower the company's FY16 (ends March '16) operating expenses to $200M. $52.3M was spent on opex in FQ1, below prior guidance of $55M-$56M and down 9% Y/Y.
- BMO, D.A. Davidson, and Summit Research have downgraded. BMO's Keith Bachman: "[W]e have concerns that the growth of x86 servers will remain weak with enterprises and (more importantly) attach rates of [10G Ethernet] will continue to be slow to ramp." He respectively forecasts Fibre Channel and Ethernet revenue will drop 9% and 26% in FY16.
Thu, Jul. 30, 4:18 PM
Thu, Jul. 23, 10:25 AM
- Believing cloud data center spending growth is slowing, Morgan Stanley's Katy Huberty has downgraded Seagate (STX -1.1%) to Underweight, and Western Digital (WDC -1.3%) and QLogic (QLGC -0.7%) to Equal Weight.
- Regarding Seagate (recently issued a calendar Q2 warning thanks to PC weakness), Huberty estimates cloud-related sales account for as much as 12% of revenue, and a larger % of gross profit. Her FY16 (ends June '16) revenue and EPS estimates are now respectively 6% and 20% below consensus.
- Huberty sees similar challenges for Western, albeit while adding its (M&A-fueled) flash product investments will partly offset. Her FY16 (ends June '16) gross margin estimate has been cut to 28.7% from 31%.
- As for QLogic (also recently warned), the company's core Fibre Channel/Ethernet connectivity market is expected to see "normal to below normal seasonality." She now expects revenue to drop 3% Y/Y in 2015.
- Huberty's cloud spending remarks come after Google reported its capex (growing rapidly in recent years) fell 5% Y/Y in Q2 to $2.52B. Western reports on July 29, QLogic on July 30, and Seagate on July 31.
Thu, Jul. 9, 12:50 PM
Thu, Jul. 9, 9:18 AM
Thu, Jul. 9, 9:12 AM
- QLogic (NASDAQ:QLGC) now expects to report FQ1 revenue of $113M and EPS of $0.16-$0.17, well below prior guidance of $124M-$132M and $0.23-$0.27, and a consensus of $128.3M and $0.25.
- The Fibre Channel/Ethernet connectivity hardware vendor blames "lower than expected demand due to general weakness in the Company's traditional enterprise server and storage markets, and a build-up of inventory at certain of its OEM customers due to a slower next-generation server transition in enterprise environments." Back in April, QLogic blamed top-line weakness it was seeing on the delayed qualification by enterprises of servers running Intel's Grantley Xeon CPUs.
- Shares have fallen to $11.60 premarket. Full FQ1 results arrive on July 30.
Wed, May 6, 9:53 AM
- Argus Financial has upgraded QLogic (NASDAQ:QLGC) to Buy, and set a $19 target.
- The upgrade 6 days after the Fibre Channel/Ethernet connectivity hardware maker posted mixed FQ4 results (EPS beat, sales missed) and guided for FQ1 revenue of $128M (+/- 3%) and EPS of $0.23-$0.27 vs. a pre-earnings consensus of $133.3M and $0.25.
- On its CC (transcript), QLogic blamed the sales weakness on the delayed qualification of servers based on Intel's Grantley Xeon CPUs (previous) among enterprises, while stating it's "very optimistic that the Grantley ramp will accelerate in the second half of FY '16."
Thu, Apr. 30, 4:19 PM
Wed, Apr. 15, 2:32 PM
- InfiniBand and Ethernet adapter/switch/controller vendor Mellanox (MLNX +4.8%) is up strongly after Intel reported 19% Y/Y server CPU division growth. Fibre Channel and Ethernet adapter/switch/controller vendor QLogic (QLGC +2.4%) is also having a good day.
- On its CC (transcript), Intel (NASDAQ:INTC) stated its Grantley Xeon E5 CPUs (launched last September, used in HPC deployments featuring Mellanox hardware) now account for over half of its 2-socket server CPU volume. Not surprisingly, the company also reported seeing strong cloud and telco server CPU demand.
- Mellanox reports on April 21. QLogic hasn't set a calendar Q1 earnings date yet.
Sat, Mar. 7, 3:26 PM
- With Intel's (NASDAQ:INTC) Grantley Xeon CPU launch and Web data center investments offsetting weak high-end server demand, IDC estimates global server revenue rose 1.9% Y/Y in Q4 to $14.5B, and Gartner estimates it rose 2.2% to $14B; those figures compares with Q3 growth estimates of 4.8% and 1.7%, respectively.
- Likewise, IDC estimates global enterprise storage revenue rose 7.2% Y/Y in Q4, aided by Web investments and healthy demand for mid-range systems featuring integrated flash. Q3 growth was pegged at 5.1%.
- IBM had a rough time its both the server and storage markets: IDC believes its storage share fell to 9% (tied for #3) from 12.7% a year earlier, and Gartner estimates its server revenue fell 14% if one excludes Big Blue's x86 server unit, which was just sold to Lenovo. After accounting for the x86 sale, IDC estimates IBM's server share was at 13.7% (#3) vs. 26.8% a year ago.
- HP (NYSE:HPQ) fared a little better: IDC has its server share falling fractionally to 26.8% (still #1 overall), and its storage share falling to 13.8% (#2) from 14.1%. The company's x86 server unit has been gaining ground against IBM's former business, but its high-end server sales remain weak.
- Cisco's (NASDAQ:CSCO) UCS server line (recently refreshed) continues to gain ground: Its share rose to 5.3% (#5) from 4.5%, with full-year revenue pegged at $2.9B. With the help of aggressive pricing and x86 growth, Dell's server share rose to 16.7% (#2) from 15.2%, while its storage share slipped to 9% (tied for #3) from 9.2%. Lenovo (OTCPK:LNVGY) claimed a 7.6% server share (#4) thanks to the IBM deal, kicking Oracle (NYSE:ORCL) out of the top-5 along the way.
- EMC, whose high-end storage sales have been pressured (mid-range/flash demand has been better), saw its storage share drop to 22.2% (still #1) from 23.1%. NetApp (NASDAQ:NTAP), which posted an FQ3 miss and light guidance last month amid tough mid-range competition from EMC and others, saw its share drop to 7.2% (#5) from 8%.
- Not surprisingly, the white-label hardware beloved by Google, Facebook, Amazon, etc. continued to take share. IDC estimates such hardware, referred to as ODM Direct, claimed server and storage shares of 8.2% and 12.8% vs. 6.4% and 9.9% a year ago.
- Sales of x86 servers, the lion's share of which run on Intel CPUs, rose 7.1% to $11.5B. Sales of non-x86 servers fell 14% to $3B, thanks to declining demand for both mainframes and UNIX servers running proprietary RISC CPUs. "Early-stage revenue" was seen for ARM (NASDAQ:ARMH) servers, largely via HP's Moonshot line.
- Other companies with strong server and/or storage exposure: STX, WDC, SMCI, MLNX, AVGO, QLGC, RHT
Wed, Feb. 25, 4:48 PM
- In tandem with its FQ1 results, Avago (NASDAQ:AVGO) announces it's buying Fibre Channel/Ethernet connectivity hardware maker Emulex (NYSE:ELX) for $609M net of cash and debt, or $8/share. The price represents a 26% premium to Emulex's Wednesday close.
- The deal is expected to be funded with cash on hand, and to close in the second half of Avago's FY15 (ends Nov. 1). It's expected to be immediately accretive.
- Avago is less than a year removed from buying LSI, whose product line includes RAID storage controllers, storage adapter cards, hard drive SoCs, and network processors. Much of Emulex's product line, which includes Fibre Channel and Ethernet adapter cards, Ethernet and storage controllers, and network monitoring hardware, is complementary to LSI's and/or services the same hardware OEMs.
- Avago is up 5.3% AH to $118.64 following the acquisition news, its FQ1 EPS beat, and strong FQ2 revenue guidance. Emulex is up 24.8% to $7.94. Emulex archrival QLogic (NASDAQ:QLGC) is up 4% to $15.16.
Fri, Jan. 30, 10:22 AM
- QLogic (QLGC +4.8%) has jumped to new 52-week highs after beating FQ3 estimates and issuing strong FQ4 guidance on its CC: Revenue of $132M-$138M and EPS of $0.24-$0.28 vs. a consensus of $133.1M and $0.25 (transcript).
- Archrival Emulex (ELX -8.1%), however, is off sharply after providing in-line FQ3 guidance - revenue of $97M-$103M and EPS of $0.11-$0.15 vs. a consensus of $100.1M and $0.13 - to go with an FQ2 beat.
- QLogic CEO Prasad Rmapalli asserts his company has been gaining share in the Fibre Channel adapter card market (59% estimated revenue share over the first three quarters of calendar 2014), and has seen "significant share gains" in the high-end 16G Gen 5 segment.
- He added strong Q/Q growth was seen for QLogic's 10G Ethernet adapters and ASICs - the company bought Broadcom's Ethernet controller business a year ago - aided by major design wins for servers running Intel's recently-launched Grantley Xeon CPUs. 25G Ethernet adoption is forecast to be "a disruptive force in the Ethernet ecosystem."
- Likely hurting Emulex: CFO Kyle Wescoat stated on the CC (transcript) "sequential [FQ3] growth in our Ethernet products is offset by Fibre Channel seasonality that could be more pronounced than usual, given the stronger-than-expected December quarter performance."
- A BMO analyst pressed Emulex about its 10G Ethernet share during the Grantley server cycle, and an RBC analyst asked if IBM's recent woes are hurting the company. CEO Jeff Benck declared Emulex is confident it can gain share during the Grantley cycle, and noted a weak UNIX server market (where IBM is a major player) can have an impact.
Fri, Jan. 30, 9:12 AM
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