Emulex Corp. Profits Drop 52% in 4th Quarter

Despite increased sales, Emulex Corp. of Costa Mesa reported Wednesday that its fourth quarter profits plunged 52% while full 1985 fiscal year earnings dropped 34%.

The company, which makes computer accessory products, cited two major causes for the decline in profits: its failure to introduce new products during the fiscal year and the persistent sales slump in the computer industry.

For the period ended June 30, the company had profits of $1 million, compared to $2.1 million last year. Revenues for the quarter were $24.5 million, about 3% below the $25.3 million in sales recorded a year earlier.

For the entire fiscal year, profits were $7.8 million, compared to $11.8 million in the 1984 year. Revenues were $103.2 million, up 29% from the $80.2 million recorded the year before.

Michael Lewis, chief financial officer for Emulex, said the company--generally recognized as one of the fastest-growing high-technology companies in the country--had originally expected 1985 fiscal year sales to be even higher and had hired staff and made plans to accommodate that. When sales started to slow in early 1985, Lewis said, the company’s higher operating costs ate into its profit margins.

Lewis said that because Emulex did not introduce any new products during the year, it was forced to rely exclusively on an older product line which typically has a lower profit margin. However, Lewis said Emulex plans to introduce nearly 80 new products in the current fiscal year.