Emulex to Sell Competitor Its Storage Products Line : Electronics: A Milpitas firm will buy the line, which is compatible with Digital computers.

Emulex Corp. said Monday that it has agreed to sell its line of storage products compatible with Digital Equipment Corp. computers.

The buyer is System Industries Inc. in Milpitas, a competitor that sells a variety of computer storage products. System Industries said it will pay $1.875 million in cash, plus a secured note for $625,000 and about 929,000 shares of common stock. A company official valued the purchase at about $5 million.

Emulex’s Digital-related storage business generated sales of $28 million for the nine months ended March 29. The asset purchase includes inventory and service businesses in Europe, North America and Asia.

Emulex announced last week that it would discontinue its line of storage products and lay off 90 of the 300 employees at its Costa Mesa headquarters. Another 70 people may be laid off at other Emulex locations.

Brian Edwards, spokesman for System Industries, said a “small number” of Emulex employees might be hired for the newly acquired business, which will be based in Milpitas. He would not give a specific number.

Data storage products made up about 30% of Emulex’s sales for the first nine months of the fiscal year. The rest of its revenue came primarily from computer networking products.

Robert N. Stephens, chief executive of Emulex, said that the company was losing money in the Digital-related business and that he foresaw no improvement. In August, Digital sued Emulex for allegedly infringing on Digital’s patents for its storage products. The suit was settled in December when Emulex agreed to phase out a particular line of storage products.