ELX RESEARCH ----- Analysts scramble to cut their estimates; screw up badly.
Again, how do you trust analysts when they had EMLX on their RECOMMENDED LIST and had to cut to "Market Perform". That's a huge screw up.
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Emulex Trims Sales Target
Emulex (ELX) warned late Thursday that sales in the upcoming year would fall far below analysts' expectations. Fiscal 2003 sales are now expected to range between $305 million to $325 million, nearly 10% lower than some analysts were anticipating. The maker of storage connectivity devices also trimmed its sales forecast for the first quarter, saying sales would come in at $68 million to $73 million. ADVERTISEMENT
Investors disregarded managment's comments that fiscal 2003 profits would be 70 cents to 75 cents a share, compared to First Call Thompson Financial's 70-cent consensus estimate. Emulex shares fell more than 33% to $15.73 by 2:40 p.m. ET on the disappointing sales news. Competitors suffered as well: QLogic (QLGC) fell more than 6% to $36.89, while Brocade (BRCD) slipped 8.5% to $15.81.
Following the warning, several analysts rushed to cut their earnings estimates and price targets. Goldman Sachs, citing disappointing sales growth and increased competition, downgraded the company from its vaunted Recommended List rating to a more-tepid Market Perform. "Expected revenue growth is disappointing, competition is heating up, and for now, the market appears to be moving away too quickly for Emulex's traditionally high-end business to keep up," wrote Goldman analyst Laura Conigliaro in a research report Friday.
In late June, Emulex moved its listing to the New York Stock Exchange from the Nasdaq, where it had been listed since its 1981 IPO.
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