Emulex Reports Earnings

Total net revenues of $111.7 million

Host Server Product net revenues of $81.2 million -- 73% of total net revenues

Embedded Storage Product net revenues of $30.4 million -- 27% of total net revenues

GAAP gross margin of 63% and non-GAAP gross margin of 67%

GAAP operating income of $9.2 million, or 8% of total net revenues, and non-GAAP operating income of $25.3 million, or 23% of total net revenues

GAAP diluted earnings per share of $0.09 and non-GAAP diluted EPS of $0.22

Cash, cash equivalents and investments of $294.4 million

Inventory turnover of 8.6 times

Business Highlights

EMC qualified Emulex's FCoE CNAs, which are now available through EMC Select

NetApp certified Emulex's FCoE CNAs for use with its new native FCoE and Fibre Channel SAN storage solutions

Sun is now selling Emulex's 8Gb/s HBAs across the Sun Fire Enterprise Server Families and Sun StorageTek Storage Solutions

NetApp is shipping Emulex's 8Gb/s HBAs with its NetApp Storage Systems

Pillar Data Systems has deployed Emulex's InSpeed(r) SOC 422 Embedded Storage Switches across its complete line of Axiom storage systems

3PAR selected Emulex's Embedded BR-2401 FC-to-SATA storage bridge for use within 3PAR InServ storage servers

Emulex joined the VMware Alliance Affiliate Initiative as the only connectivity partner in the program

Financial Results

First quarter total net revenues were $111.7 million, a decrease of 5% from the comparable quarter of last year and a 1% sequential decrease.

First quarter GAAP net income was $7.1 million, or $0.09 per diluted share, compared to GAAP net income of $10.2 million, or $0.12 per diluted share, reported in the year ago period and a loss of $50.4 million, or $0.61 per share, in the immediately preceding quarter.

Non-GAAP net income for the first quarter, which excludes amortization of intangibles, stock-based compensation, and severance and associated costs, was $17.9 million, or $0.22 per diluted share. Non-GAAP net income per diluted share decreased 19% from $0.27 per diluted share reported a year ago and was flat sequentially compared to the fourth quarter. Reconciliations between GAAP and non-GAAP results are included in the accompanying financial data.

Jim McCluney, president and CEO, commented, "Despite the continuing economic and market volatility, we are pleased to deliver results at the high end of our guidance of $108-$111 million in revenues for the first quarter, and exceeding our non-GAAP earnings guidance of $0.18-$0.20 per diluted share. Our balance sheet remains strong, with$294 million in cash and investments, after completing our share repurchase plan originally adopted in 2006, and making the tax payments associated with our globalization initiatives during the quarter."

Emulex Corp.