QLogic Qloses Quiet Quarter

QLogic Corp. (Nasdaq: QLGC) today became the first storage vendor to officially announce earnings this quarter, and it provided more evidence that storage companies had a rough time selling over the last three months.

QLogic barely hit its revenue guidance and missed analysts expectations, reporting net revenues of $129.8 million and net income of $34 million, or $0.36 earnings per share. The revenue rose 3 percent from the same quarter last year and 1 percent from the previous quarter. Net income was up 1 percent over last year and down 2 percent from last quarter.

Still, the lack of an outright disaster may have given investors a feelng of relief. Qlogic shares were trading up $1.04 (4.24%) to $25.54 in after-hours trading.

Two weeks ago QLogic said it would hit its previous guidance range of $128 million to $132 million despite problems other storage vendors were experiencing (see Emulex Hits the Deck). However, the company fell below the First Call revenues estimate of $130.3 million while meeting the EPS target.

For guidance, QLogic CEO H.K. Desai had forecast $129.8 million in $134.9 million in revenue and $0.34 to $0.37 EPS for next quarter. That includes an expected loss of about $3 million because of a transition to a hub-based inventory model by one of its major OEMs. The high end of the guidance matches analysts’ expectations.On the positive front, Desai said revenue from QLogic’s core business of Fibre Channel HBAs grew 28 percent year over year and eight percent sequentially, with port counts increasing 48 percent year over year and 16 percent sequentially.

Keep in mind that this might be one of the better storage reports over the next few weeks. QLogic’s major HBA rival Emulex Corp. (NYSE: ELX) is among the companies that have warned of poor sales, especially over the final two weeks of June. That was a common theme among storage companies, with warnings coming from tape library vendors Storage Technology Corp. (StorageTek) (NYSE: STK), Overland Storage Inc. (Nasdaq: OVRL), and Quantum Corp. (NYSE: DSS); software companies Veritas Software Corp. (Nasdaq: VRTS) and BakBone Software Inc. (Toronto: BKB); and hard-drive manufacturer Maxtor Corp. (NYSE: MXO). (See StorageTek Sings Sad Song, Overland Guides Under, Quantum Gives Prelim Results, Veritas Takes a Dive, Another Reason to Hate Compliance, and Maxtor Cuts Heads, Guidance).

Emulex, Overland and Quantum all mentioned problems with one or two OEMs. Analysts fingered Hewlett-Packard Co. (NYSE: HPQ) as one of the problem OEMs in each case. Desai said QLogic's Fibre Channel revenue rose with eight of its 10 OEMs.

— Dave Raffo, Senior Editor, Byte and Switch