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Emulex Earnings Fall Short, but Wall Street Is Unfazed

April 06, 2001|From Bloomberg News

Emulex Corp., which makes computer-circuit cards, joined a growing roster of technology companies announcing disappointing results.

The Costa Mesa company said Thursday that profits for the fiscal third quarter were less than it had forecast as customers canceled orders.

The company's stock shrugged off the news, climbing along with other computer-related shares after Dell Computer Corp., the largest U.S. personal-computer maker, stuck with its quarterly sales and earnings forecasts.

Emulex's stock, which has been battered this year, on Thursday surged 36%, or $4.50 a share, to $17 in Nasdaq trading. The shares still have lost nearly 79% of their value this year.

Emulex earned about 13 cents a share excluding charges in the quarter ended April 1, spokeswoman Robin Schnug said. The company had forecast a profit of as much as 23 cents, while analysts were projecting earnings of about 19 cents, according to a survey by First Call/Thomson Financial.

In the third quarter a year ago, Emulex earned about $7.7 million, or 20 cents a share.

Emulex makes circuitry cards that accelerate data transmission for customers, including computer and data storage-system makers. It said Feb. 12 that profit estimates were at risk if orders kept falling. Customers include Compaq Computer Corp., Hewlett-Packard Co. and Sun Microsystems Inc.

"Here's a company that is still making money and will be in a good position once the market recovers," said Mark Kelleher, a First Albany Corp. analyst who rates Emulex a "strong buy."

The shares rose on the latest revised forecast because "the bad news is already priced into the stock," Kelleher said.

Sales in the quarter are expected to rise to between $59 million and $60 million from almost $37 million in the year-ago period, Emulex said in a preliminary review of its results.

The company hasn't determined how much of a charge it will take for its acquisition of Giganet Inc., completed March 1, Chief Financial Officer Michael Rockenbach said.

At the time it was announced Dec. 7, the acquisition was valued at about $645 million on about 4 million shares and assumed options of Emulex stock. The acquisition's value was about $50 million based on Emulex's closing share price on Wednesday.

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