Emulex: Fiscal 3Q13 Financial Results

Emulex Corporation announced preliminary results for its third quarter of fiscal 2013, which ended on March 31, 2013.

Third Quarter Financial Highlights

• Total net revenues of $116.8 million
• Network Connectivity Products (NCP) net revenues of $85.2 million, representing approximately 73% of total net revenues
• Network Visibility Products (NVP), consisting of products from the recent acquisition of Endace, net revenues of $4.9 million for the partial period since the acquisition, representing 4% of total net revenues
• Storage Connectivity Products (SCP) net revenues of $20.8 million, representing 18% of total net revenues
• Advanced Technology and other Products (ATP) net revenues of $5.9 million, representing 5% of total net revenues
• Non-GAAP gross margins of 65% and GAAP gross margins of 58%
• Non-GAAP diluted earnings per share of $0.20 included a benefit of $0.06 from the retroactive reinstatement of the Federal R&D tax credit
• GAAP loss per share of $0.08
• Cash, cash equivalents and investments at the end of the quarter of $91.6 million

Third Quarter Business Highlights

• Completed acquisition of Endace Limited, expanding the portfolio of products to include network packet capture and network visibility software and appliances
• Gained four points in FC revenue market share over our nearest competitor during CY12, according to Dell’Oro Group’s Q4 2012 FC Adapter Vendor Report
• Announced the availability of 16Gb FC HBAs for the Fujitsu PRIMERGY server product line
• LPe16000B 16GFC HBAs named DataCentre Networking Product of the Year from DataCentre Solutions, as a finalist for the Network Products Guide Best Products of the Year, and Network Connectivity Brand of the Year by WatchStor Magazine in China
• Announced broad partner adoption of LightPulse 16GFC HBAs, for joint virtualization, flash storage, and data archiving and backup solutions with DataCore Software, GreenBytes, Pure Storage, Quantum, and X-IO
• Received the Product Line Strategy Award for leadership in the network recorder and traffic visibility market for the Endace range of network recording and visibility tools from Frost & Sullivan
• Enhanced its Connect Partner Program, including a new program, improved reseller training tools, and streamlined deal registration and web enablement
• Named to CRN 2013 Partner Program Guide and awarded a 5-Star Partner rating for excellence in its overall channel program for the third year in a row
• Appointed Gene Frantz and Greg Clark to the Emulex board of directors, adding expertise to the Board across the spectrum of technology and telecom sectors

CEO Jim McCluney commented: "I’m pleased to report we completed the acquisition of Endace, which will form the core of our Network Visibility Product line. It’s still early days, but our Connect, Monitor and Manage strategy is really resonating well with the end user community and I’m very excited about the incremental opportunities the acquisition brings to Emulex for the fourth quarter and beyond into fiscal 2014."

"The team did an outstanding job of balancing the demands for closing the transaction and beginning integration of the two companies, and at the same time, once again achieving our revenue and earnings guidance for the quarter. After completing the acquisition, we exited the quarter with more than $90 million in available cash and investments," McCluney concluded.

Storage Connectivity Products (SCP) include InSpeed, FibreSpy, switch-on-a-chip (SOC), bridge and router products. SCP are deployed inside storage arrays, tape libraries, and other storage appliances to connect storage controllers to storage capacity, delivering improved performance, reliability, and connectivity.

Business Outlook
For the fourth quarter of fiscal 2013, Emulex is forecasting total net revenues in the range of $118 – $122 million. The company expects non-GAAP earnings per diluted share of $0.11 – $0.13 in the fourth quarter. GAAP estimates for the fourth quarter reflect approximately $0.25 per diluted share in expected charges arising primarily from amortization of intangibles, stock-based compensation, costs associated with the acquisition of Endace and the royalties, mitigation expenses and license fees associated with the Broadcom patent litigation, as well as the associated tax impact and U.S. valuation allowance.