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QLogic: Fiscal 4Q16 Financial Results

Revenue down 11% for quarter and 12% for year

(in $ million) 4Q15 4Q16 FY15 FY16
Revenue 133.0 119.4 520.2 458.9
Growth   -11%   -12%
Net income (loss) 11.1 18.2 50.6 46.5

QLogic Corp. announced its financial results for the fourth quarter and fiscal year ended April 3, 2016.

Net revenue for the fourth quarter of fiscal 2016, which included fourteen weeks, was $119.4 million compared to $133.0 million in the same quarter last year.

Revenue from Advanced Connectivity Platforms was $109.5 million during the fourth quarter of fiscal 2016 compared to $120.7 million in the same quarter last year.

Net income on a GAAP basis for the fourth quarter of fiscal 2016 was $18.2 million, or $0.22 per diluted share, compared to $11.1 million, or $0.13 per diluted share, for the fourth quarter of fiscal 2015. Net income on a non-GAAP basis for the fourth quarter of fiscal 2016 was $25.2 million, or $0.30 per diluted share, compared to $24.9 million, or $0.28 per diluted share, for the fourth quarter of fiscal 2015.

Net revenue for fiscal 2016, which included 53 weeks, was $458.9 million compared to $520.2 million in fiscal 2015.

Revenue from Advanced Connectivity Platforms was $417.9 million during fiscal 2016 compared to $465.0 million in fiscal 2015. Net income on a GAAP basis for fiscal 2016 was $46.5 million, or $0.54 per diluted share, compared to $50.6 million, or $0.57 per diluted share, in fiscal 2015. Net income on a non-GAAP basis for fiscal 2016 was $84.5 million, or $0.98 per diluted share, compared to $97.0 million, or $1.10 per diluted share, in fiscal 2015.

I am very pleased with our financial performance during the fourth quarter and our strong finish for the second half of fiscal 2016. For the second consecutive quarter, we delivered both revenue and non-GAAP earnings per diluted share above the high end of our guidance range,” said Jean Hu, CFO and acting CEO. “Looking ahead, we will continue to focus on improving operational execution to deliver intelligent high performance connectivity solutions across both enterprise and cloud data centers.”

Business Outlook for the First Quarter of Fiscal 2017
QLogic expects to achieve net revenue in the range of $112 – $118 million for the first quarter of fiscal 2017, which quarter reflects a normal 13-week period. The company is forecasting first quarter non-GAAP earnings per diluted share of $0.23 – $0.27. QLogic estimates that GAAP earnings per diluted share will be lower than non-GAAP earnings per diluted share by $0.11 – $0.13 per share in the first quarter of fiscal 2017. The company’s forecasted guidance is a forward-looking statement and does not include the effects of future acquisitions/divestitures, unanticipated asset impairments and other special charges, and other non-recurring items not reflective of ongoing operations. The company’s forward-looking estimates of both GAAP and non-GAAP measures of financial performance may differ materially from actual results and should not be relied upon as statements of fact.

Comments

Abstracts of the earnings call transcript:

Jean Hu, acting CEO and CFO:
"Fiscal 2016 was a year of both challenges and opportunities for QLogic. Earlier in the year, we had certain strategic and operational execution issues that adversely impacted our financial performance for the first half of fiscal 2016. During the second quarter, we took action to recalibrate our strategic focus and our core FC and Ethernet product portfolios, where we have been the most successful.
"Fourth quarter revenue from legacy connectivity products, which are comprised primarily of switch products, was $9.9 million and declined from $12.3 million recorded in the fourth quarter of last year.
"Turning now to our balance sheet, our cash and marketable securities totaled $355 million, or more than $4 per share, at the end of the fourth quarter.
"At the middle point of our guidance range, we expect revenue from Advanced Connectivity Platforms to be approximately $106.5 million, an increase of approximately 1% sequentially after adjusting for the approximately $4 million of revenue from the 14th week in the fourth quarter for fiscal 2016. Revenue from legacy connectivity products is expected to be in the range of $8 million to $9 million."

Roger J. Klein - SVP and GM, Fiber Channel:
"Reception of the new [FC] Gen 6 products is very positive with robust design win and qualification activity.
"FC adoption in all-flash arrays coupled with the continued innovation and our ongoing investment for the SAN market will help improve market stability and longevity."

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