Emulex Enthused by Q4 Results

Host bus adapter maker Emulex Corp. (NYSE: ELX) announced fourth-quarter earnings today that beat both its own guidance and analysts' expectations by a penny (see Emulex Posts Record Q4).

The Cost Mesa, Calif.-based company posted quarterly earnings of $18.4 million, or 22 cents a share, compared to a loss of $11.4 million for the year-ago quarter. Before one-time items, Emulex reported a profit of $19.1 million, or 23 cents a share. Both the company and analysts polled by Thomson First Call had expected that number to be 22 cents a share (See Is Emulex Slowing Down?).

Emulex also reported a steep year-over-year revenue hike, with its revenues jumping 16 percent to $81.8 million from $70.2 million a year ago. Sequentially, the companys revenues grew 3 percent from $79.6 million.

"We are continuing to tap the core growth opportunity in the HBA market," Emulex chairman and CEO Paul Folino said on a conference call this evening, insisting that the company still has room to increase its market share in the space. "We’ve grown faster than the overall market for a couple of years now, and we intend to continue that trend."

After Emulex reported its third-quarter earnings in April, some analysts suggested that the company's growth would start to slow. The company dispelled that prospect with its earnings today -- at least for the time being (see Is Emulex Slowing Down?).Emulex saw the strongest growth opportunity in the midrange market, Folino said. CFO Mike Rockenbach added that the midrange growth came mainly though partners Hewlett-Packard Co. (NYSE: HPQ) and Dell Computer Corp. (Nasdaq: DELL). In addition, Folino said, the company has been making significant progress with its Thor dual-channel 2-Gbit/s Fibre Channel controller chip.

For the full year 2003, Emulex’s revenues jumped 21 percent to $308 million, compared with $255 million last year. The company also reported a 54 percent hike in its pro forma earnings for the year, recording a profit of $70.4 million, or 84 cents a share.

The company said it ended 2003 with $412 million in cash and cash equivalents. That’s up from $287 million at the end of 2002.

For the first quarter of 2004, Emulex says it expects to report earnings per share of 23 cents, on revenues of between $82 million and $85 million.

Emulex said it reduced its inventory by 40 percent during the quarter due to record high inventory churn. The company also said it added 18 employees during the quarter, bringing its total headcount to 395 employees.Before reporting earnings after the market closed today, Emulex saw its stock shoot up 4.7 percent, to $21.42 a share.

— Eugénie Larson, Senior Editor, Byte and Switch