how nice to see you again szabel
COULD THIS REALLY HAVE BEEN ISSUED YESTERDAY???
08:54am EDT 22-Aug-01 C.E. Unterberg, Towbin (James Poyner 212-389-8104)
QLGC
QLGC: Begins $300 Rebate for SBus HBAs, Suggesting Growing Price Pressure
James D. Poyner Jr. 212-389-8104 jpoyner@unterberg.com
Christine Bae 212-389-8217 cbae@unterberg.com
Qlogic Corporation (QLGC* $33.32) Neutral August 22, 2001
Begins $300 Rebate for SBus HBAs, Suggesting Growing Price Pressure
Key Data
52-Week Range $17.81 - $130.25
Weighted Average Shares (MM) 92.5
Float (MM) 62.9
% Held Institutionally 70%
Market Capitalization (Bil.) $3.8
Average Daily Volume (MM) 6.8
Revenues - LTM (MM) $375.8
Total Debt (MM) $0
Cash Per Share $4.00
Long-Term Growth Rate 30%
12-Month Target Price N/A
Fiscal Year Ends: March 2000A 2001A 2002E
Revenue (MM) $223 $362.7 $366
Earnings Per Share Q1 $0.11 $0.21 $0.20A
Q2 $0.14 $0.24 $0.21E
Q3 $0.15 $0.28 $0.22E
Q4 $0.16 $0.28 $0.23E
Year $0.56 $1.03 $0.89E
Shares Fully Diluted (000) 74,568 97,669 95,216
Company Overview
QLogic is a leading provider of host bus adapters as well as
storage-related semiconductors that are sold primarily through
OEM relationships with server, storage and disk-drive
manufacturers.
Key Points
We continue to rate the stock Neutral. Our view is that the
stock still faces challenges in its SCSI-related business that
continues to lend risk to estimates. We don't believe purchase
is merited until the stock drops materially below $30, with a
$35 or so target.
We listened to a webcast Tuesday afternoon aimed at QLogic
resellers of its switching and HBA products. While most of the
presentation was stock stuff, our ears pricked up at news of
$300 rebates to channel partners for the company's relatively
new SBus host bus adapters, products that typically cost about
$1,000-$1,200 retail. This suggests that QLogic is having to
press harder for channel sales, which have been less than 25% of
revenue. JNI is the vendor most at risk with this promotion
given its high SBus concentration, but Emulex also has entered
the market in recent months.
The presentation also touted the company's new 2-gigabit 16-port
switch at about $14,800, or $925 a port, versus segment leader
Brocade's typical $19,000-$20,000, or $1,200 per port, for a 1-
gigabit product. With no major OEMs to push the new switch
beyond a balky Sun Microsystems, QLogic clearly is trying to
take share in the channel on price. That may work in the HBA
arena, but the comfort factor at the switch level makes it less
price sensitive for now. Still, QLogic, more than Vixel and
Gadzoox before it, is becoming a stalking-horse vendor in
switching based on low price.
With guidance flat in the September second quarter for fibre-
channel revenue versus June at about $56 million, it will be
interesting to see if these price initiatives create any
momentum.
We'd continue to be leery of purchase just yet at the current
price because our estimate could still prove high for the second
quarter. |
