QLogic (QLGC) 44.40 +6.14: While Cisco Systems garnered most of the headlines last night, a separate report is driving names in the Storage sector higher this morning. That report was released by QLogic, which makes Fibre Channel HBAs (host bus adapters) and switches for networked storage devices. The company reported fourth quarter earnings of $0.22 per share, exceeding the consensus estimate by two cents. On the top line, revenues came in at $92.3 million, also ahead of consensus expectations for sales of $87.8 million. So going by the headline numbers, QLogic comfortably topped analyst estimates.
The question is whether expectations were so depressed going into the report that the actual results mean little. Put another way, how did QLogic's quarter look from a quality of operations standpoint, stepping outside relative comparisons to the estimates. The short answer is the quarter looked reasonably good. Fibre Channel revenue rose 20% year-over-year and 9% sequentially. At the same time, SCSI revenue continued to rebound and was up an impressive 14% sequentially. It's also notable that the company's already solid balance sheet continued to get stronger. Fourth quarter DSO's dropped to 37 days versus 41 days in the prior quarter while inventory turns were up to 5.6x from 4.6x.
From a liquidity standpoint, QLogic now carries $490 million in cash and investments which translates to just over $5 per share. Looking forward, the company expects first quarter revenues to rise about 3% to 8% sequentially and sees EPS in the $0.20 to $0.24 range. Management indicated its business was up sequentially at virtually all its Fibre Channel OEM's, with particular strength at Sun Microsystems (SUNW +7.3%). Keep in mind that QLogic's report carries positive implications for Brocade Communications (BRCD +14.9%) which reports on May 15th, after market-close. -- Mike Ashbaugh, Briefing.com |
