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Press Releases | 2008 | 2007 | 2006 | 2005 |
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Press Contact: Robin Austin, Director, Public Relations , 714-885-3462
Investor Contact: Michael J. Rockenbach, Chief Financial Officer, 714-885-3695
EMULEX REPORTS FIRST QUARTER RESULTS
Record Switch and HBA Port Shipments for the Third Quarter in a Row
COSTA MESA, Calif., October 27, 2005 -- Emulex Corporation (NYSE:ELX), the industry's preeminent source for a broad range of storage networking infrastructure solutions, today announced results for its first fiscal quarter ended October 2, 2005.
First Quarter Highlights
- First quarter revenues rose 43% from a year ago to $104.4 million.
- Non-GAAP diluted EPS of $0.27 and GAAP diluted EPS of $0.19, represented an increase of 145% and 19%, respectively, over the comparable year-ago results.
- Port shipments for host bus adapters, or HBAs, and embedded storage switches increased for the third quarter in a row to record levels.
- Emulex 4 Gigabit per second, or 4Gb/s, revenues grew 45% sequentially vs. the prior quarter, while 4Gb/s design wins expanded to more than 65.
- Non-GAAP gross margin was 64% and GAAP gross margin was 63%.
- Non-GAAP operating margin was 34% and GAAP operating margin was 23%.
- Cash and investments, net of debt, reached $315 million, up $27 million sequentially from fourth quarter levels.
Financial Results
First quarter revenues, essentially all of which were comprised of Fibre Channel products, rose 43% from a year ago to $104.4 million. First quarter non-GAAP net income rose by 156% from the comparable year-ago results, to $24.3 million, or $0.27 per diluted share. First quarter GAAP net income increased by 15% from a year ago to $16.4 million, or $0.19 per diluted share. A reconciliation between GAAP and non-GAAP results is included in the accompanying financial data.
Although a major OEM customer exhibited more seasonality than expected, all major product sectors including HBAs, I/O ASICs, or IOCs, and switches grew significantly from a year ago. IOCs expanded more than 60% from the comparable quarter last year due to increased demand for FICON connectivity, which is displacing legacy ESCON technology in mainframe storage environments. HBA revenue grew more than 40% from a year ago and switch revenue increased more than 30% from the comparable period last year. Emulex's InSpeed storage switching solutions continued to gain momentum in the market as the Company's installed base grew to 8 million ports, up from 6 million ports at the end of the fourth quarter, complementing its growing installed base of over 2 million Emulex HBAs.
During the first quarter, Emulex continued to execute to its growth strategies which center on capturing new customers and design wins for next-generation 4Gb/s, blade server, and Linux solutions. Paul Folino, CEO and Chairman, stated, "Emulex is now commercially shipping a full array of 4Gb/s Fibre Channel solutions spanning its HBA, switching and IOC product lines, demonstrating once again our ability to deliver quality next-generation solutions first to market." To date, Emulex has amassed more than 65 OEM design wins for 4Gb/s HBAs, IOCs and switches. At present, Emulex 4Gb/s HBAs are certified and available from Bull, Dell, EMC and HP, as well as Emulex's worldwide distribution partners. In the first quarter, as part of its continuing blade server effort, Emulex announced its first I/O design win for the HP BladeSystem server blade. The Company also announced that its blade server I/O solutions for the IBM BladeCenter as well as the HP BladeSystem were both qualified by EMC for connection to its Symmetrix and CLARiiON arrays. Emulex also captured its first Linux design wins with HP, spanning the ProLiant, BladeSystem and StorageWorks product lines from HP. In July, Emulex announced its first-ever OEM agreement with Sun Microsystems for Emulex HBAs, opening up the HBA market for Sun servers that are SAN attached to Sun storage. Folino noted, "During the first quarter, we launched commercial shipments of Sun-certified HBAs, and we are encouraged by the continued expansion of Sun business in the second quarter, which is positioning Sun to quickly become one of our top 5 direct HBA OEMs."
Business Outlook
Although actual results may vary depending on a variety of factors, many of which are outside Emulex's control, Emulex is providing guidance for its second fiscal quarter ending January 1, 2006. Emulex believes that with seasonal strength, revenue contribution from new customers and new 4Gb/s programs, it will have the opportunity to grow second quarter revenue up to 8% sequentially. As a result, Emulex is budgeting for second quarter revenue in a range of $108-$112 million. Emulex believes that non-GAAP diluted earnings per share could amount to $0.28-$0.30. On a GAAP basis, Emulex expects diluted second quarter EPS of $0.18-$0.20 per share, reflecting approximately $0.10 per share in expected GAAP charges arising primarily from amortization of intangibles and stock-based compensation.
Webcast Information
Emulex will host a webcast today at 2:00 p.m. Pacific time to discuss the financial results in detail. The webcast may be accessed live via the home page of the Emulex website at www.emulex.com. During the call, Emulex will discuss details of the first fiscal quarter financial results. A replay of the webcast will be available in the audio archive section of the investor relations page of the Emulex website. In addition, a replay of the quarterly conference call will be available for 48 hours by calling (888) 203-1112 -- and using the passcode 7439048.
About Emulex
Emulex Corporation is the industry's preeminent source for a broad range of advanced storage networking infrastructure solutions spanning host bus adapters, embedded storage switches, I/O controllers and SAN Storage Switches. Emulex ranked number 19 in the Deloitte 2005 Technology Fast 50 and is listed on the New York Stock Exchange (NYSE:ELX).
The world's leading server and storage providers rely on Emulex HBAs, embedded storage switching and I/O controller products to build reliable, scalable and high performance storage solutions. The Emulex award-winning product families, including its LightPulse® HBAs and InSpeed™ embedded storage switching products, are based on internally developed ASIC, firmware and software technologies, and offer customers high performance, scalability, flexibility and reduced total cost of ownership. The company's products have been selected by the world's leading server and storage providers, including Bull, Dell, EMC, Engenio, Fujitsu Ltd., Fujitsu Siemens, HP, Hitachi Data Systems, IBM, NEC, Network Appliance, Quantum Corp., Sun Microsystems, Unisys and Xyratex. Corporate headquarters are located in Costa Mesa, California. News releases and other information about Emulex Corporation are available at http://www.emulex.com.
EMULEX | We network storage
Note Regarding Non-GAAP Financial Information. The non-GAAP financial information included in this press release is not prepared in accordance with GAAP as it excludes impairment charges, gains or losses on the repurchase of convertible subordinated notes and litigation settlements, as well as charges relating to stock-based compensation and amortization of intangibles. Management believes that the presentation of non-GAAP information may provide useful information to investors because Emulex has historically provided this information and understands that some investors consider it useful in evaluating Emulex's core business. Management also uses this non-GAAP information, along with the GAAP information, in evaluating Emulex's business for these purposes. The non-GAAP results should not be considered a substitute for financial information presented in accordance with GAAP, and may be different from non-GAAP or other pro forma measures used by other companies.
"Safe Harbor'' Statement under the Private Securities Litigation Reform Act of 1995: With the exception of historical information, the statements set forth above, including, without limitation, those contained in the discussion of "Business Outlook" above, contain forward-looking statements that involve risk and uncertainties. We expressly disclaim any obligation or undertaking to release publicly any updates or changes to these forward-looking statements that may be made to reflect any future events or circumstances. The company wishes to caution readers that a number of important factors could cause actual results to differ materially from those in the forward-looking statements. The fact that the economy generally, and the technology and storage segments specifically, have been in a state of uncertainty makes it difficult to determine if past experience is a good guide to the future and makes it impossible to determine if markets will grow or shrink in the short term. In the past, the Company's results have been significantly impacted by a widespread slowdown in technology investment that pressured the storage networking market that is the mainstay of the Company's business. A downturn in information technology spending could adversely affect the Company's revenues and results of operations. As a result of this uncertainty, the Company is unable to predict with any accuracy what future results might be. Other factors affecting these forward-looking statements include, but are not limited to, the following: slower than expected growth of the storage networking market or the failure of the Company's OEM customers to successfully incorporate the Company's products into their systems; the Company's dependence on a limited number of customers and the effects of the loss of, or decrease or delays in orders by, any such customers, or the failure of such customers to make payments; the emergence of new or stronger competitors as a result of consolidation movements in the market; the timing and market acceptance of the Company's or the Company's OEM customers' new or enhanced products; the variability in the level of the Company's backlog and the variable booking patterns of the Company's customers; the effects of terrorist activities, natural disasters and resulting political or economic instability; the highly competitive nature of the markets for the Company's products as well as pricing pressures that may result from such competitive conditions; the Company's ability and the ability of the Company's OEM customers to keep pace with the rapid technological changes in the Company's industry and gain market acceptance for new products and technologies; the effect of rapid migration of customers towards newer, lowest cost product platforms; possible transitions from board or box level to application specific computer chip solutions for selected applications; a shift in unit product mix from higher-end to lower-end products; a decrease in the average unit selling prices or an increase in the manufactured cost of the Company's products; delays in product development; the Company's reliance on third-party suppliers and subcontractors for components and assembly; any inadequacy of the Company's intellectual property protection or the potential for third-party claims of infringement; the Company's ability to attract and retain key technical personnel; the Company's dependence on foreign sales and foreign produced products; the effect of acquisitions; impairment charges; changes in tax rates or legislation; and changes in accounting standards, including changes in the accounting treatment of employee stock options. These and other factors which could cause actual results to differ materially from those in the forward-looking statements are discussed in the company's filings with the Securities and Exchange Commission, including its recent filings on Forms 8-K, 10-K and 10-Q, under the caption "Risk Factors."
This news release refers to various products and companies by their trade names. In most, if not all, cases these designations are claimed as trademarks or registered trademarks by their respective companies.
