Emulex Shares Rise 19% Despite New Stock Offering
Emulex Corp.’s stock surged Thursday to a 52-week high even as the company launched a new stock offering that normally would depress the share price.
The Costa Mesa company’s shares rose 19%, or $12.25, to $75.50 in heavy trading, an indication that investors remain infatuated with companies offering devices that speed access to computer data.
Earlier in the session, the shares hit a 52-week high of $81.75.
The stock climbed despite a secondary stock offering of 2.1 million shares that was priced earlier Thursday at $61 each. The company sold 2 million shares of common stock, and Chairman Fred Cox sold 100,000 of his 350,000 shares.
Interest in Emulex has been building steadily since the company’s announcement April 6 that it was planning a secondary stock offering at $33.50 a share, said Robert Montague, an analyst at Morgan Keegan & Co.
The company then embarked on a roadshow to solicit support among investors and analysts. Emulex shares closed April 6 at $34.38.
Then on April 22, the company announced it had blown away its year-earlier third-quarter performance, reporting net income of 20 cents a share on $18.2 million in revenue, compared with operating income of 2 cents a share on $15 million in revenue in the year-ago period.
Shares of Costa Mesa competitor QLogic Corp. also hit a 52-week high Thursday, moving up to $118.94 during the session before settling back a bit to close at $116.88, up $13.50 for the day.
The roots of the network storage market can be traced to the proliferation of computers. As computers have generated more data, the need to effectively store and manage that data also has increased.
Previously, network storage devices relied on technology called SCSI, or small computer system interface. SCSI recently has been bumped by new technology called fiber channel, which essentially provides easier, faster storage and management of data.
Fiber channel will become the storage-market standard, Montague said, and Emulex and QLogic are armed with fiber-channel technology.
Emulex said proceeds from the secondary offering are expected to be used for working capital and general corporate purposes, including capital expenditures, sales and marketing, and research and product development.
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Stock Rockets
Emulex Corp.’s stock, moving steadily upward for six weeks, hit a 52-week high of $81.75 Thursday before settling back to close at $75.50 a share. The stock has more than doubled since early April. Daily closing prices:
April 5: $32.25
April 6: $34.38
April 7: $36.50
April 8: $38.00
April 9: $38.25
April 12: $41.25
April 13: $47.00
April 14: $47.75
April 15: $44.00
April 16: $44.13
April 19: $43.00
April 20: $41.63
April 21: $41.00
April 22: $44.75
April 23: $46.75
April 26: $46.00
April 27: $45.00
April 28: $44.13
April 29: $43.38
April 30: $44.13
May 3: $45.06
May 4: $45.00
May 5: $45.31
May 6: $48.63
May 7: $59.44
May 10: $66.50
May 11: $64.94
May 12: $67.88
May 13: $69.50
May 14: $66.56
May 17: $64.81
May 18: $66.13
May 19: $63.25
Thursday’s close: $75.50
Source: Bloomberg News
