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Emulex Shares Ride the Roller Coaster

March 29, 2000|From Times Staff and Bloomberg News

Shares of Emulex Corp. (ticker symbol: EMLX), which have risen sharply over the last year, plunged 26% on Tuesday after a Wall Street analyst warned that the firm's own progeny poses a threat to its market share.

Costa Mesa-based Emulex tumbled $57.14 to $160.92, carving about $2 billion from its market value. The stock had just recently rebounded after sinking in the general Nasdaq selloff early in March.

Emulex develops fiber-channel technology that clears up bottlenecks in computer networks, increasing their ability to move and store data. Its chips are used in mainframes that run on the Unix operating system.

But many companies are moving toward smaller computers that run on Windows NT software and use chips made by QLogic Corp. (QLGC), said the analyst, Robert Montague of Morgan Keegan. As a result, he predicted that Emulex would match but not outperform the market.

QLogic was spun off from Emulex in 1994. Since then, Aliso Viejo-based QLogic has emerged as its former parent company's main competitor, vying for leadership in the hot data-storage sector.

The Unix operating system, however, still dominates among corporate computer networks, said Emulex spokeswoman Karen Mulvany. And she said Emulex is designing chips to take advantage of growth in the number of Windows NT systems.

"Nobody is talking about any kind of retreat in terms of the growth of the industry or our position in it," Mulvany said.

Despite the one-day drop, Emulex's shares are still up twentyfold in the last year. QLogic, meanwhile, fell $9 to $139 Tuesday.

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Emulex Sell-Off

One day after reaching a record high, shares of Emulex tumbled 26% on Tuesday as an analyst downgraded the stock. Daily closes and latest on Nasdaq:

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Tuesday: $160.92, down $57.14

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Source: Bloomberg News

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