LOS ANGELES – Data storage equipment maker Emulex Corp. on Tuesday reported a wider fiscal quarterly net loss and warned that revenues in the current quarter and the coming year would fall short of expectations.
The Costa Mesa, California-based company, reported fiscal fourth-quarter net income, excluding charges, of $9 million, or 11 cents a share. That was down from than the $9.6 million, or 12 cents a share, reported in the same quarter last year but at the high end of Wall Street forecasts.
Revenues fell about 3 percent from the prior quarter to $58.4 million, and the company, which makes high-speed adapters, warned revenues in the current quarter were likely to drop another 6 percent to $55 million, with pro forma earnings per share of 9 cents.
Analysts had been expecting revenues for the September quarter to come in between $59 million and $63 million, according to Thomson Financial/First Call, which tracks such forecasts.
Emulex, like other companies in the storage network sector, said it had been caught by an unexpected drop-off in demand as information technology budgets were squeezed this year.
IDC, the market research company, had earlier forecast overall growth in the market at 12 percent in 2001, but has sharply lowered that forecast and now expects a contraction of between 6 percent and 10 percent, the company said.
Despite the slowdown, Emulex is gaining share and is the dominant supplier the market for host bus adapters that use the Fibre Channel, a technology standard that allows data to be transferred at high speeds, Paul Folino, Emulex's president and CEO told analysts.
Emulex sells 85 percent of its products to brand name manufacturers and its three biggest customers in the past quarter were IBM, Compaq Computer Corp., and EMC Corp, Folino said.
While one of those three had cut back sharply on orders for Fibre Channel products in the fiscal fourth quarter, demand from that storage manufacturer had recovered in July, as it appeared to work through inventory, Folino said.
Emulex negotiates built-in volume discounts for the storage makers it supplies that have averaged 15 percent to 20 percent annually in recent years and the pace of that across-the-board discounting remained steady in the most recent quarter, he said in response to a question about the downward pressure on prices.
As part of its forecast for the full year, Emulex projected that revenues would rise 10 percent in the December quarter from the current quarter, largely on the strength of new products, including a cutting-edge 2-gigabit-per second host bus adapter, a device which controls communications across a storage network.
``If the economy turns around, that could offer upside,'' Folino said. ``If the economy turns around we'll all get some incremental joy out of that one.''
On a net basis, including charges, Emulex posted a loss of $31.3 million, or 38 cents per share for the quarter ended July 1, compared with a loss of $9.6 million, or 12 cents per share in the same quarter a year earlier.
Emulex projected revenues for the fiscal year ending June 2002 of betwen $250 million and $255 million and pro forma EPS of 43 cents. That revenue estimate for the coming year was below the $279 million to $330 million that Wall Street analysts' had forecast, according to Thomson Financial/First Call.
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