QLogic: Fiscal 3Q09 Financial Results

(in US$ millions)	3Q08	3Q09	9 mo. 08	9 mo. 09
Revenues	158.0	163.7	438.1	503.3
*Growth*		+4%		*+15%*
Net income (loss)	31.9	30.8	73.4	89.6

QLogic Corp. announced its third quarter financial results for the period ended December 28, 2008.

Third Quarter Highlights

Net revenue increased 4% from the comparable quarter last year to $163.7 million.
Net income: $30.8 million GAAP, $42.5 million non-GAAP.
Net income per diluted share: $0.24 GAAP, $0.34 non-GAAP.
Cash generated from operations was $49.9 million.
$371.7 million in cash and marketable securities as of December 28, 2008.

Financial Results
Net revenue for the third quarter of fiscal 2009 was $163.7 million and increased 4% from $158.0 million in the comparable quarter last year. Revenue from Host Products, which are comprised primarily of Fibre Channel and iSCSI host bus adapters and InfiniBand host channel adapters, was $112.2 million during the third quarter of fiscal 2009 compared to $118.9 million in the same quarter last year. Revenue from Network Products, which are comprised primarily of Fibre Channel and InfiniBand switches, was $32.8 million during the third quarter of fiscal 2009 and increased 18% from $27.8 million in the comparable quarter last year. Revenue from Silicon Products, which are comprised primarily of protocol chips, was $16.5 million during the third quarter of fiscal 2009 and increased 78% from $9.3 million in the comparable quarter last year.

Net income on a GAAP basis for the third quarter of fiscal 2009 was $30.8 million, or $0.24 per diluted share, compared to $31.9 million, or $0.23 per diluted share for the third quarter of fiscal 2008. Net income on a GAAP basis for the third quarter of fiscal 2009 includes stock-based compensation expense, acquisition-related charges, special charges, impairment charges on available-for-sale securities, net gains on trading securities, and the related income tax effects and valuation allowance on deferred tax assets. Net income on a non-GAAP basis for the third quarter of fiscal 2009 was $42.5 million, or $0.34 per diluted share, and increased from $41.0 million, or $0.30 per diluted share for the third quarter of fiscal 2008.

“Despite a very challenging macroeconomic environment, QLogic delivered solid financial performance during the third quarter,” said H.K. Desai, QLogic’s chief executive officer. “We are confident that our technology focus and business strategies are fundamentally sound. We will continue to invest in key development projects and maximize operating efficiencies to drive market leadership and long-term success.”

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Here are some abstracts of the conference call transcript:

Simon Biddiscombe, SVP and CFO:

"Our third quarter revenue from host products which are comprised primarily of Fibre Channel and iSCSI host bus adaptors and InfiniBand host channel adaptors was $112.2 million and decreased 6% from $118.9 million recorded in the third quarter of last year.

"During the third quarter our revenue from network products, which are comprised primarily of Fibre Channel and InfiniBand switches was $32.8 million and increased 18% from $27.8 million recorded in the third quarter of last year. The growth was primarily driven by our InfiniBand switches and Fibre Channel blade switches.

"Our third quarter revenue from silicon products comprised of Fibre Channel and iSCSI protocol chips was $16.5 million and increased 78% from $9.3 million recorded in the third quarter of last year.

"In response to this challenging environment during the third quarter we implemented a reduction in force, eliminating approximately 4% of our headcount. This action is expected to result in annualized cost savings of approximately $5 million.

"We expect total revenue for the March quarter to be in the range of $130 million to $140 million. Due to potential variation in product mix, we expect gross margin for the March quarter to range from 67% to 68%."

H.K. Desai, CEO:

"We continue to make significant progress in our FCoE initiative and expect OEM revenue to begin in the second half of calendar 2009 and be meaningful in 2010. Even in this uncertain economic times we believe the value proposition for convergence will drive customer demand. FCoE can reduce acquisition and operation cost by requiring less equipment, lowering power and [inaudible] costs and simplifying management."