NEW YORK – Data storage equipment maker Emulex Corp. (ELX) stock lost more than a third of its value on Friday and pulled down the storage sector after it said it expected weaker full-year sales than Wall Street had expected.
The stock, which was halted after the New York Stock Exchange opened, fell $8.26, or 35 percent, after trading resumed to close at $15.35, well below its year low of $19.01.
Merrill Lynch storage analyst John Roy Roy said he did not think the company's guidance was terrible news, but said: "People are looking for bad news."
Brokerage Credit Suisse First Boston cut its 12-month price target for the stock Friday to $20 from $30.
Emulex said on a Web cast after the market closed on Thursday that it estimates sales in its fiscal 2003, ending next June, will range from $305 million to $325 million.
For the first quarter, ending in September, the company expects sales of $68 million to $73 million.
Emulex's sales forecast for the year is anywhere from 4 percent to 10 percent below the average estimate among securities analysts of $338 million, according to research firm Multex. Its first-quarter estimate is also 2 percent to 9 percent shy of analysts' average expectations, which were $74.7 million before the call.
The news dragged down storage rival Brocade Communications Systems Inc. 11 percent to $15.10 and QLogic Corp. fell 8.7 percent to $35.08.
The Goldman Sachs Technology Index for hardware of which Emulex is a part, fell 4.5 percent.
"I think the storage sector will trade down but I don't think this will bring the technology sector in general down," Roy said. Roy who does not own Emulex shares rates the stock as an intermediate term "buy."
Before the conference call, Emulex had reported a narrower fiscal fourth-quarter loss of $11.4 million, or 14 cents per share, as sales of new products fueled a 20 percent rise in revenue. The year before it had reported a net loss of $31.3 million, or 38 cents per share.
"We believe that, with the month of July already under its belt, and August typically weak seasonally, Emulex's tempered guidance demonstrates that the environment is still difficult," Deutsche Bank Securities analyst Sabrina Ricci said in a research note.
In June this year, Emulex moved its shares to the New York Stock Exchange from the Nasdaq stock market, where it had been listed since its initial public offering in 1981.
Last year, college student Mark Jakob from Los Angeles was sentenced to jail for issuing a fake press release in August 2000 that triggered frenzied selling in the stock of Emulex.