JNI Soars on Emulex Rumor

Shares of host bus adapter vendor JNI Corp. (Nasdaq: JNIC) shot up 27 percent last Friday after a rumor spread like wildfire through the investment community that rival Emulex Corp. (NYSE: ELX) would acquire the company.

JNI's stock closed at $6.25 per share on Friday, up $1.34, amid a generally flat day for technology issues. A total of 2,110,000 shares traded hands, which was heavier volume than usual for the stock. In early trading today, JNI was down 1.4 percent, at $6.16.

JNI spokeswoman Stephanie Blank says the stock apparently shot up because of a widespread rumor that the company would be acquired by Emulex. But she adds that JNI doesn't comment on rumors or speculation. An Emulex spokeswoman declined to comment.

If Emulex were looking to buy JNI -- which is a distant third in the segment behind Emulex and QLogic Corp. (Nasdaq: QLGC) -- the primary motivation would probably be to gain market share. Analysts have noted that growth of the HBA market is slowing down, which may be prompting Emulex to shore up its position via consolidation (see Is Emulex Slowing Down?).

Meanwhile, Bear Stearns & Co. Inc., which tracks JNI, was at a loss to explain the uptick. "We haven't picked up anything new," says analyst Naveen Bobba. The firm maintains a Underperform rating on JNI.Todd Spangler, US Editor, Byte and Switch