QLogic Beats Estimates, Pushes 8-Gig Fibre Channel

HBA specialist QLogic beat analyst estimates with a strong set of fourth-quarter results last night, boosted by the continuing popularity of Fibre Channel.

Despite the advent of InfiniBand and iSCSI, Fibre Channel clearly still has legs as a data center interconnect, and QLogic execs on a call last night described their plans to exploit 8-Gbit/s and even 16-Gbit/s versions of the technology over the coming year.

We are energized by our current market opportunities in 8-Gig Fibre Channel, in InfiniBand switches, and iSCSI technologies,” said H.K. Desai, the QLogic CEO. “We continue to gain traction with our Fibre Channel edge and blade switches."

Desai singled out 8-Gbit/s Fibre Channel as a major growth driver for the company near term. QLogic’s OEM partner HP has already started shipping the vendor’s switches and HBAs in its 8-Gig Simple SAN Connection Kit and Desai confirmed that other OEM deals are in the pipeline.

Buoyed by Fibre Channel demand, the vendor’s fourth-quarter revenues were $159.7 million, a 9 percent hike on the same period last year, and well above analyst estimates of $149.6 million.Revenue from QLogic’s host products, which include Fibre Channel and InfiniBand HBAs and Infiniband Host Channel Adapters (HCAs) accounted for $110.3 million of the vendor’s fourth-quarter revenues, up from $105.1 million in the same period last year.

The vendor’s recently announced 8-Gbit/s Fibre Channel HBAs accounted for just $1 million of the company’s fourth-quarter revenues, although Desai predicted that this figure will rise significantly during the coming year.

“We expect to continue that growth, and we expect about 20 percent revenue at the end of the year coming from 8-Gig,” he said, adding that QLogic will also be investing in 16-Gbit/s Fibre Channel this year.

The CEO also explained that QLogic’s InfiniBand business also grew sequentially in fourth quarter, and he gave an update on his firm’s Fibre Channel-over-Ethernet (FCOE) efforts.

“FCOE represents a major market expansion opportunity for us beyond storage into data networking,” he said. “We are sampling FCOE products now and expect to be first to market with FCOE-converged network adapters.”At least one analyst warns that FCOE is still in its relative infancy. "The emerging FCOE technology is unlikely to be adopted by any customer before 2010,” wrote Pacific Growth Equities analyst Kaushik Roy, in a note released this morning. But he added that QLogic’s rival Brocade will not introduce its own 8-Gbit/s Fibre Channel HBAs until later this year. “We do not expect Brocade to gain much traction in 2008 in the Fibre Channel HBAs arena.”

Overall, the analyst was impressed with QLogic’s fourth-quarter financials. "It was widely anticipated that QLogic would have a blow-out quarter, but the scale of the upside certainly caught us by surprise,” he wrote, predicting QLogic revenue growth of 6 percent for the coming financial year.

Despite an increasingly uncertain economic climate, QLogic’s quarterly earnings per share were solid last night. On a GAAP basis, the vendor reported fourth-quarter earnings of 17 cents on net income of $22.8 million, up from 12 cents and $18.4 million in the year-ago quarter.

The vendor’s non-GAAP earnings were 28 cents on net income of $37.7 million, up from 22 cents and $35.2 million in the same period last year. Analysts had estimated earnings of 26 cents per share.

For the full year, QLogic’s revenues were $597.9 million, up from $586.7 million in the prior year.Have a comment on this story? Please click "Discuss" below. If you'd like to contact Byte and Switch's editors directly, send us a message.