5/15 QLGC (winner $42 run $62) earnings as forecast as sales growth slows
LOS ANGELES, May 15 (Reuters) - QLogic Corp. (NasdaqNM:QLGC - news), which makes products that connect computer networks and storage networks, reported fourth-quarter earnings in line with expectations as sales growth slowed for the third consecutive quarter.
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The Aliso Viejo, California-based company also forecast revenues would fall in the current quarter, the first outright decline on a quarterly basis in three years, and said earnings for the quarter would come in at the low end of Wall Street forecasts.
Revenues, adjusted for a sales discount granted to Sun Microsystems, were $99.7 million, up 5 percent from the third quarter's $95.1 million when sales had risen by 10 percent. Net earnings per share, adjusted for the discount, were 27 cents.
In the September quarter, sales had risen by 26 percent.
Analysts had projected earnings of between 25 and 29 cents per share for the quarter ended April 1, according to Thomson Financial/First Call.
Before the adjustment, pro forma net income grew 55 percent to $26.6 million, or 28 cents a share diluted, compared to $17.1 million, or 18 cents a share, in the year-earlier period.
In a conference call for investors, QLogic forecast revenues would decline by between 3 and 8 percent in the current quarter from the one just ended, the first such decline for the company in 12 quarters. It projected earnings per share of between 22 and 25 cents in the quarter, at the low end of current Wall Street expectations.
Although the company cautioned that visibility remained limited based on information from its corporate customers, it projected a rebound in the September quarter, with revenues growing between 5 and 10 percent from the current quarter.
QLogic chairman, chief executive and president H.K. Desai said the company would continue to invest in rolling out its Fibre Channel products despite the downturn, since it sees products based on that standard continuing to grow faster than other offerings over the longer term.
``Although we continue to monitor the economic outlook, no major technological initiatives have been curtailed,'' he said.
Shares in QLogic have staged a powerful rally since early April, gaining more than 96 percent this quarter, outperforming the Nasdaq Composite which is up just 13 percent over that period. The stock, which is a component in the Standard & Poor's 500 index, closed Tuesday at $42.51 on the Nasdaq, up 2.4 percent on the day and was unchanged in after-hours trade.
QLogic sells chips that are used in servers and other computers made by name-brand manufacturers such as Fujitsu Corp. and Sun Microsystems (NasdaqNM:SUNW - news) and markets high-speed switches and other devices used in data storage.
The company said major sales agreements in the past quarter included deals by both Sun and Compaq Computer Corp (NYSE:CPQ - news) to use QLogic's Fibre Channel devices in their products.
QLogic said it had granted warrants to Sun to purchase up to 791,250 shares of common stock at an exercise price of $13.74. For the past quarter, the company recorded the value of those warrants as a non-cash sales discount equal to $900,000.
Other fast-growing technology vendors have used similar warrants as a way to create sales incentives for partner companies. |
