Emulex May Create a Firm to Market SCSIs : * Computing: Costa Mesa company says the device accounted for a third of its revenue for the quarter ending March 29.
The market for a device that allows computers to connect to printers and data storage devices is so potentially lucrative that Emulex Corp. may create a separate company to design and market the product.
The device, known officially as a small computer system interface, or SCSI, accounted for about a third of Emulex’s revenue for the three months ended March 29, Chief Financial Officer Bob L. Corey said Thursday.
Emulex said the plan could include selling a minority interest in the new company through an initial public stock offering. The rest of the shares would be divvied up among existing Emulex shareholders.
“We’re in the process of talking to potentially (interested) bankers about marketing and selling a minority interest,” he said.
The business of making the SCSIs--called “scuzzies” in industry jargon--is significantly different from Emulex’s principal businesses of supplying data storage and computer networking equipment, company officials said. Spinning off that business into a separate entity will allow its management to focus solely on that market. And the stock offering will give the business the financing it needs for expansion, they said.
Emulex said no final decision has been made on whether to go ahead with the plan to spin off the business.
Costa Mesa-based Emulex also said Thursday that its third-quarter earnings declined 36% to $1.4 million, or 13 cents a share, from $2.2 million, or 20 cents a share, for the corresponding period last year.
Sales for the three months ended March 29 dipped 10% to $36.4 million. The company said earnings and revenue declined because of weaker sales of storage products.
“All business units were strong except storage products, which is still in transition as we phase out older products and introduce new ones,” said Emulex President Robert N. Stephens.
Corey said the company has two new storage products, one using CD-ROM technology and the other using tape. The company also said it reduced product inventory during the quarter.
