Earnings Preview: QLogic

| About: QLogic Corporation (QLGC)
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QLogic (NASDAQ:QLGC) is expected to report Q1 of FY12 earnings after the market close on Thursday, July 28, with a conference call scheduled for 5:00 pm ET.


The consensus estimate is 34c for EPS and $150.04M for revenue, according to First Call. On its last earnings call, management provided Q1 EPS/revenue guidance of 30c-35c and $145M-$153M. Gross margins were guided to 66%-67% although opex is expected to trend slightly up quarter-over-quarter due to employee benefit reinstatement and incremental investment opportunities.

Analyst Views

RBC Capital Markets believes QLogic benefited from further adoption of 8Gb Fibre Channel host bus adapters and switches and lower-margin 10GbE products. In addition, RBC believes the company is likely to provide September quarter, Q2 guidance that at least meets the current Street consensus estimates of 36c on $155.36M in revenue. The current consensus estimate for sequential revenue growth of 3%-4% matches QLogic's historical seven-year average seasonality growth rate of up 4%. RBC believes QLogic has a few tailwinds working in its favor that will likely further unfold in the 2H of CY11, including the Fibre Channel edge switch ramps at EMC (EMC) and Hewlett-Packard (NYSE:HPQ), broad portfolio targeted at the unified fabrics opportunity, and large deployable cash balance that will likely be utilized for accretive share repurchases.