QLogic Shares Jump 35% on 1st-Quarter Earnings Report
QLogic Corp.’s shares rose 35% after the Costa Mesa maker of computer accessories said fiscal first-quarter earnings more than doubled, beating estimates.
The company, which makes products that link disk drives and other accessories to computers, saw its stock price leap $13 a share to $50.50. Earlier in the session, the stock surged to $55.99, a 52-week high. Nearly 2.8 million shares changed hands, compared with the average daily volume of 171,000 shares over the last three months.
On Thursday, QLogic said net income for the quarter ended June 28 rose to $4.8 million, or 52 cents a share, from $2.2 million, or 35 cents a share, a year earlier. Three analysts polled by First Call Corp. had estimated earnings of 43 cents a share.
Sales rose 33% to $24.1 million from $18.2 million.
The company attributed the strong earnings and sales to demand for products that connect hard drives to computers.
Shares of Emulex Corp., another fiber channel technology developer and the former parent of QLogic, rose 39%, apparently on the strength of QLogic’s first-quarter performance. Emulex stock closed at $10.25 a share, up $2.88.
Neil Cooper, an analyst with Cruttendon Roth Inc., said fiber channel technology is gaining acceptance as a way of connecting servers with data storage machines. A future generation of products may use the technology to connect multiple servers and storage units, he said.
Jim Thayer, an analyst with Prudential Securities, said that fiber channel accounted for only 10% of QLogic’s sales during the first quarter, but he expects it to account for a growing proportion of the company’s business. First-quarter fiber-channel sales were three times those in the previous quarter, he said.
Steve Denegri, an analyst with Morgan Keegan & Co., said a decision by Dell Computer Corp. to use QLogic’s fiber channel technology had signaled acceptance of the new version of interconnecting servers and disk storage cabinets.
This week both International Business Machines Corp. and Fujitsu Ltd.’s Amdahl Corp. unit announced plans to use fiber channel products made by Emulex, which also is based in Costa Mesa.
