Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : The New QLogic (ANCR) -- Ignore unavailable to you. Want to Upgrade?

To: trendmastr who wrote (28785)	7/25/2001 11:38:08 AM
From: trendmastr	Read Replies (1) \| Respond to of 29386

07:38am EDT 25-Jul-01 Salomon Smith Barney (H. Clinton Vaughan 415-951-1786) QLGC: QLogic Lowers Guidance; Lowering Rating, Estimates and PT. SALOMON SMITH BARNEY QLogic Corporation (QLGC) QLGC: QLogic Lowers Guidance; Lowering Rating, 3H (Neutral, High Risk) Estimates and PT. Mkt Cap: $3,915.1 mil. July 25, 2001 SUMMARY * We expect the stock to be under pressure due to DATA STORAGE the economic downturn, expected delays in new INFRASTRUCTURE adoption cycles and design wins, transition of its H. Clinton Vaughan business to Fibre Channel from SCSI, inventory 415-951-1786 overhang at OEMs, and pressure in the storage h.clinton.vaughan@ssmb.com industry. Joseph Wana * We are lowering our F2Q02 revenue estimate to 415-951-1804 $87.5 million from $101.6 million, representing a joseph.wana@ssmb.com (0.1%) yoy and a (5.0%) qoq decline. We are lowering our F2002 revenue estimate to $363.3 million from $420.6 million, representing 0.1% growth. * We are lowering our F2Q02 EPS to $0.21 from $0.27. We are lowering our F2002 EPS to $0.89 from $1.11. * We are lowering our rating on QLogic to 3H from 1H and our price target to $42 from $70. FUNDAMENTALS P/E (3/02E) 45.8x P/E (3/03E) NA TEV/EBITDA (3/02E) NA TEV/EBITDA (3/03E) NA Book Value/Share (3/02E) NA Price/Book Value NA Dividend/Yield (3/02E) NA/NA Revenue (3/02E) $363.3 mil. Proj. Long-Term EPS Growth 25% ROE (3/02E) 0.0% Long-Term Debt to Capital(a) NA QLGC is in the S&P 500(R) Index. (a) Data as of most recent quarter SHARE DATA . RECOMMENDATION Price (7/24/01) $40.74 Current Rating 3H 52-Week Range $128.25-$18.19 Prior Rating 1H Shares Outstanding(a) 96.1 mil. Current Target Price $42.00 Convertible No Previous Target Price $70.00 EARNINGS PER SHARE FY ends 1Q 2Q 3Q 4Q Full Year 3/01A Actual $0.21A $0.25A $0.28A $0.28A $1.02A 3/02E Current $0.23A $0.21E $0.22E $0.23E $0.89E Previous $0.24E $0.27E $0.29E $0.31E $1.11E 3/03E Current NA NA NA NA NA Previous $0.32E $0.33E $0.35E $0.36E $1.36E 3/04E Current NA NA NA NA NA Previous NA NA NA NA NA First Call Consensus EPS: 3/02E NA; 3/03E NA; 3/04E NA Calendar Year EPS: 12/01E NA; 12/02E NA; 12/03E NA; 12/04E NA OPINION Lowering Rating and Price Target --------- We are lowering our rating on QLogic to 3H from 1H and our price target to $42 from $70. We expect the stock to be under pressure due to the economic downturn, expected delays in new adoption cycles and design wins, transition of its business to Fibre Channel from SCSI, inventory overhang at OEMs, and pressure in the storage industry. We have assigned QLogic a 42x forward PE multiple and arrived at a $42 price target. Lowering Estimates ------------------ We are lowering our F2Q02 revenue estimate to $87.5 million from $101.6 million, representing a (0.1%) yoy and a (5.0%) qoq decline. We are lowering our F2002 revenue estimate to $363.3 million from $420.6 million, representing 0.1% growth. We are lowering our F2Q02 EPS to $0.21 from $0.27. We are lowering our F2002 EPS to $0.89 from $1.11. F1Q02 Results ------------ On 7/24 QLogic reported F1Q02 results at the low end of guidance. QLogic reported F1Q02 revenues of $92.1 million representing 18.9% yoy growth and a (8.4)% qoq decline (our estimate $95.3 million). QLogic reported EPS of $0.23 versus our estimate of $0.24 and the street estimate of $0.23. Fibre Channel revenue was approximately $56.0 million, representing 48% yoy and 10% qoq growth. SCSI revenue was approximately $36.1 million, representing a (1%) yoy and a (27%) qoq decline. Gross margins were 62.7% for the quarter down compared to 63.1% last quarter and 65.6% a year ago. Operating margin was 30.2% versus 34.1% last quarter and 34.2% a year ago. Cash and short-term investments increased to $379.7 million from $355.5 million last quarter. Inventory levels remained relatively flat at $46.9 million compared to $46.5 million last quarter. Inventory turns ratio declined to 2.9 versus 3.2 in the prior quarter. DSOs increased to 51 days from 49 days last quarter and increased from 28 days a year ago. Headcount increased to 638 in F2Q02 from 624 in the prior quarter, a 2.2% increase. Guidance -------- Management expects revenues will be flat or may decline up to 5% in F2Q02 from the current quarter. F3Q02 and F4Q02 are expected to increase 3-5% qoq. Management expects the Fibre channel business will grow at a higher rate than the SCSI business for the long-term. Further, the SCSI business is expected to decline 10-15% qoq for 1-2 quarters due to inventory overhang at a major OEM. Management provided guidance for F2Q02 EPS in the range of $0.20-$0.23. Other Indicators ---------------- Prices on 2Gbps products are similar to prices on 1Gbps products. Management believes it has not experienced unusual pricing pressure in Fibre Channel HBAs or chips. QLogic expects to be qualified by Sun in the near term. H. Clinton Vaughan 415-951-1786 First Call Corporation, a Thomson Financial company. All rights reserved. 888.558.2500 ]