Earnings Preview: QLogic

| About: QLogic Corporation (QLGC)

QLogic (NASDAQ:QLGC) is expected to report Q2 earnings after the market close on Wednesday, October 21, with a conference call scheduled for 5:00 pm ET.


The consensus estimate is 18c for EPS and $125.71M for revenue, according to First Call. QLogic's stock is up approximately 36% in the last three months. Overall options volume in the name is several times greater than average, with calls outnumbering puts by a wide margin, with institutional-sized purchases. The shares are gaining despite management's forecast on July 22 for weaker-than-expected sales and earnings. QLogic's guidance was for sales to be flat to +3% quarter-over-quarter, implying $122.8M-$126.48m based on Q1 reported revenue of $122.8M. Guidance for Q2 EPS is for 16c-18c.

Analyst Views

RBC Capital believes that given the current signs of enterprise spending picking up in 2H09, coupled with commentary from IBM and Intel (NASDAQ:INTC) suggesting that we are likely to see a server refresh, investors are anticipating a mid to high single digit quarter-over-quarter revenue growth from QLogic. Key items for the conference call: An update on the CNA markets and when should investors expect this to be a material revenue driver; comments on expectations with regard to revenue trends in Q3 and impact of the server refresh cycle; details on operating margin trends and the company's ability to achieve 30% EBIT margins of approximately $140M in revenues; and lastly, details on future cash deployment.

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Tagged: , Semiconductor - Integrated Circuits, Earnings
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