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Emulex results weighed down by acquisition

The computer hardware maker posts a loss of $10 million as it seeks to broaden its business. It expects to report a profit this quarter.

January 26, 2007|Ashley Surdin | Times Staff Writer

Emulex Corp., a Costa Mesa-based computer equipment manufacturer, said Thursday that it had a $10.1-million loss in its latest quarter because of higher expenses and charges related to an acquisition.

Chief Executive Jim McCluney said the one-time charges were a minor pothole on the path toward broadening Emulex's products, which help computers communicate with one another and manage and store data.

"Our second-quarter results were the highest revenues we've ever achieved," McCluney said. "Our diversification strategy is working."

The company said it expected to return to profitability in the current quarter, which ends in March.

Emulex shares closed Thursday at $18.78, up 8 cents, before the earnings were released. In after-hours trading, the stock fell to $18.40.

Emulex, which employs 700 people worldwide, has been dipping into a cash hoard, which totaled $269 million in December, to buy other companies to strengthen its business of making host servers and storage and networking hardware. In October, the company had $412.9 million in cash and investments.

That same month, Emulex paid $162 million for Sierra Logic Inc., a Roseville, Calif.-based chip-design company. The acquisition was similar to the company's $39-million purchase in May of San Jose-based Aarohi Communications Inc., which allowed Emulex to tap into the data center market.

Emulex's 12-cent-a-share loss in its fiscal second quarter ended Dec. 31 contrasted with net income of $17.2 million, or 19 cents a share, in the same quarter a year earlier.

Excluding charges, the company earned $24.9 million, or 27 cents a share, which matched the expectations of analysts surveyed by Thomson Financial.

The company posted $121.4 million in revenue for the quarter, up 10% from a year earlier. The bulk of the company's sales came from networking host bus adapters -- devices that connect network servers and storage devices at high speeds.

For its third quarter, Emulex expects per-share net income of 10 cents to 12 cents, compared with 13 cents a share earned in the same quarter of 2006. Revenue was projected to reach $115 million to $119 million, an increase of 29% to 33% over the same period last year.

Emulex, founded in 1979, employs more than 320 at its headquarters and nearly 400 people in seven development centers worldwide, including Paris, Beijing and Britain.

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ashley.surdin@latimes.com

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