Tue, Jan. 13, 10:33 AM
- Emulex (NYSE:ELX) now expects FQ2 revenue of $110M-$111M and EPS of $0.23-$0.24, above prior guidance of $102M-$108M and $0.14-$0.18; consensus is at $105.7M and $0.16.
- CEO Jeff Benck: "Emulex finished calendar year 2014 in a much stronger position led by a resilient Fibre Channel sector and benefiting from solid execution and customers' embrace of our current product cycles." The company sees a "broad slate of OEM qualifications of our 10Gb Ethernet products designed for next generation x86 servers [ramping] in the market over the next year."
- Full FQ2 results arrive on Jan. 29. Improving server demand appears to have provided a lift.
- Archrival QLogic (QLGC +5.7%) and InfiniBand/Ethernet adapter and switch vendor Mellanox (MLNX +3%) are also outperforming, as is Fibre Channel switch leader Brocade (BRCD +3.2%). The Nasdaq is up 1.7%.
Dec. 30, 2014, 8:53 AM
- "We believe QLGC is well-positioned to return to sustainable growth driven by new Ethernet connectivity products, with new storage architectures allowing Fibre Channel connectivity to grow as well," writes D.A. Davidson's Mark Kelleher, launching coverage with a Buy rating.
- Kelleher: "Based on our assumption of a 10% growth rate, a P/E/G ratio of 1.2 (a P/E multiple of 12x) and our calendar 2016 EPS estimate of $1.14, and adding $3.14 per share in cash, we calculate a 12-18 month price target for QLGC of $17."
- An improving server market has helped QLogic's Fibre Channel ops stabilize. The recent acquisition of Broadcom's Ethernet controller unit has provided a top-line boost, but also pressured margins.
- Morgan Stanley upgraded QLogic less than two weeks ago.
Dec. 17, 2014, 11:44 AM
- Five months after upgrading QLogic (NASDAQ:QLGC) to Equalweight, Morgan Stanley has upped its rating for the adapter card/switch vendor to Overweight. Archrival Emulex (NYSE:ELX) is catching a sympathy bid.
- MS also hiked its server industry growth forecast today, thanks in part to a belief Microsoft's ending of Windows Server 2003 support (set for July 2015) will drive strong upgrade activity. IDC, which recently estimated server industry revenue rose 4.8% Y/Y in Q3, holds a similar view.
Dec. 4, 2014, 7:04 PM
- With a corporate upgrade cycle and Web/cloud demand boosting sales, IDC estimates global server revenue rose 4.8% Y/Y in Q3 to $12.7B, an improvement from Q2's 2.5% growth and Q1's 2.2% decline. Gartner is more conservative, estimating revenue only rose 1.7%.
- "IDC has seen increasing market influence from Greater China, hyperscale datacenters, ODMs and native Chinese OEMs, all of which grew sharply in the third quarter," says VP Matt Eastwood. Like others, IDC expects Intel's recent Grantley Xeon CPU launch, together with the pending end of Windows Server 2003 support, to keep demand healthy.
- Thanks to weak demand for its high-end, Itanium-based, Integrity servers, market leader H-P's (NYSE:HPQ) share fell 140 bps Y/Y to 26.5%, after having risen 40 bps in Q2. H-P just rolled out Integrity servers running (x86-based) Intel Xeon CPUs in an attempt to stop the bleeding.
- #2 IBM's share fell 500 bps to 18.2%, thanks to both high-end (mainframe/Power) and x86 weakness. The sale of IBM's x86 server unit to Lenovo closed early in Q4. #3 Dell's share rose 80 bps to 17.8%.
- Cisco (NASDAQ:CSCO) passed Oracle (NYSE:ORCL) to take the #4 slot: Cisco's share rose 130 bps to 6.2% on the back of 31% revenue growth, while Oracle's was flat at 4.1% (3.4% revenue growth). Today, Cisco and IBM announced a converged hardware solution that pairs the former's UCS servers with the latter's Storwize storage arrays.
- As expected, white-label servers sold to Internet giants (called ODM Direct by IDC) continued gaining ground: Their share rose 250 bps to 8.9%. Everyone else saw their share collectively rise 210 bps to 18.4%.
- Related tickers: SMCI, MLNX, QLGC, ELX
Oct. 17, 2014, 12:52 PM
Oct. 16, 2014, 5:37 PM
Oct. 16, 2014, 5:07 PM
- QLogic (NASDAQ:QLGC) has launched a $100M buyback, good for repurchasing 11% of shares at current levels.
- FQ2 results beat estimates thanks to both 5%+ Q/Q growth for QLogic's Fibre Channel ops (struggling in recent quarters), and a $5M increase for an Ethernet business expanded earlier this year through the purchase of Broadcom's Ethernet controller ops.
- Altogether, sales of "advanced connectivity platforms" (server/storage adapters and chips) rose 22% Y/Y, an improvement from FQ1's 14% growth and offsetting an ongoing decline in legacy switch products.
- Emulex (NYSE:ELX) could follow QLogic higher. Its shares jumped yesterday following an FQ1 guidance hike.
- FQ2 results, PR
Oct. 16, 2014, 4:32 PM
Oct. 15, 2014, 5:35 PM
Oct. 15, 2014, 9:51 AM
- Emulex (NYSE:ELX) expects FQ1 revenue of $102M-$104M, above prior guidance of $93M-$99M and a $96.4M consensus.
- The adapter card/switch vendor says it saw "solid performance across multiple product lines including Fibre Channel and Ethernet." Fibre Channel sales have been declining, but Emulex did state in August it thought the business was improving. A pickup in server sales might be helping.
- Emulex added it has seen "a broad set of I/O qualifications" for servers running Intel's new Grantley Xeon CPUs. Intel stated on yesterday's Q3 CC it's seeing strong Grantley uptake.
- Full FQ1 results arrive on Oct. 30. Archrival QLogic (QLGC +0.3%) is up slightly in the face of a 1.1% Nasdaq drop.
Aug. 27, 2014, 7:21 PM
- IDC estimates global server sales rose 2.5% Y/Y in Q2 to $12.6B. That marks a turnaround from the 2.2% drop seen in Q1, and the 4.4% drop seen in Q4. Gartner estimates sales grew 2.8%.
- IDC declares the server market, hurt in recent quarters by system consolidation and a shift in demand towards the white-label gear beloved by Web giants (referred to by IDC as ODM Direct), is seeing "the beginning of a cyclical refresh cycle." It sees the pending launch of Intel's (NASDAQ:INTC) Grantley Xeon CPUs, along with Microsoft's plans to end Windows Server 2003 support, lifting sales into 2015.
- Sales of x86 servers (mostly Intel-based) rose 7.8% in Q2, and now make up 78% of industry revenue. Non-x86 server sales fell 12.8%.
- Market leader H-P's (NYSE:HPQ) share rose 40 bps Y/Y to 25.4%, with x86 growth offsetting Itanium weakness. #2 IBM's share fell 340 bps to 23.6% ahead of the sale of its x86 server ops to Lenovo; on the bright side, IBM's decline narrowed from Q1's 600 bps.
- #3 Dell's share fell 160 bps to 16.2%. #4 Oracle's (NYSE:ORCL) grew 10 bps to 5.9%, with engineered system growth offsetting declines for older UNIX/SPARC server lines. #5 Cisco (NASDAQ:CSCO), which recently proclaimed its UCS server ops are on a $3B/year run rate, saw its share rise 140 bps to 5.8% on the back of 35% growth. Cisco should pass Oracle in a quarter or two.
- ODM Direct vendors saw their share grow 110 bps to 6.6%. The shares of all other vendors rose 190 bps to 16.1%.
- Related tickers: SMCI, MLNX, QLGC, ELX
Aug. 8, 2014, 1:08 PM
- On top of beating FQ4 estimates, Emulex (NYSE:ELX) is guiding for FQ1 revenue of $93M-$99M and EPS of $0.07-$0.11, favorable to a consensus of $94.2M and $0.06.
- However, on the CC (transcript), the company forecast its storage connectivity/other products unit (SCOP - covers bridges, storage controllers, and other products) will decline by 30% or more in FY15 (ends June '15), as "a significant portion" of related sales enter the end-of-life stage.
- SCOP was 17% of FQ4 revenue. As it is, the unit's sales fell 32% Q/Q and 42% Y/Y during the quarter.
- On the bright side, Emulex thinks its slumping Fibre Channel adapter/switch business is improving, and believes (after seeing QLGC's FQ1 numbers) it grabbed 200 bps of Fibre Channel share in FQ4.
- The company also expects Intel's upcoming Grantley Xeon server CPU launch will boost Ethernet-related sales, though it suggests much of the impact will come in the second half of FY15.
- FQ4 results, PR
Aug. 4, 2014, 9:41 AM
- Barclays has upgraded InfiniBand switch/adapter market leader Mellanox (MLNX +2.5%) to Equal Weight, and downgraded Fibre Channel switch/adapter leaders QLogic (QLGC -1.3%) and Emulex (ELX -6.3%) - the former to Equal Weight, and the latter to Underweight.
- All three companies also have a presence in the data center Ethernet switch/adapter space. Barclays is optimistic about Mellanox's improving business trends, and worried about the impact of a declining Fibre Channel market on QLogic and Emulex.
- Mellanox rallied 10 days ago after providing strong Q3 guidance to go with in-line Q2 results, and providing upbeat commentary on demand from both HPC and non-HPC markets. QLogic plunged after guiding for a Q/Q gross margin drop (caused by a mix shift towards Ethernet products) to go with an in-line revenue forecast. Emulex reports on Thursday.
Jul. 25, 2014, 7:07 PM
- QLogic (QLGC -10%) posted in-line FQ1 revenue to go with a slight EPS beat, and also guided on its CC (transcript) for in-line FQ2 revenue: $121M-$127M vs. a $124.7M consensus.
- But the company also forecast its gross margin will drop to 62%-63% from FQ1's 64.4%, and said it's "comfortable" with a 62-63% GM for the whole of FY15.
- Perhaps more worrying than the guidance itself is the explanation: A mix shift towards Ethernet product sales, which are expected to grow by $3M-$4M Q/Q. With QLogic's core Fibre Channel market expected to keep declining, the company is counting on Ethernet sales (a double-digit % of revenue following the purchase of Broadcom's Ethernet controller unit), along with its budding storage ASIC business, to drive growth.
- CFO Jean Hu previously estimated the Ethernet business has only a ~40% gross margin. When pressed yesterday on Ethernet's long-term impact on Emulex's margins, she argued the company will be able to reap "manufacturing cost synergies" beyond FY15.
- Archrival Emulex (ELX -2.3%) followed QLogic lower. The company reports on Aug. 7.
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