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.
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| 4 Comments
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. 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.
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, 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. 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.
Jul. 11, 2014, 9:40 AM
May. 2, 2014, 4:43 PM
- 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.
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