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QLogic: Fiscal 1Q14 Financial Results

Needs urgently to restructure.

 (in $ million) 1Q13 1Q14
 Revenue 130.4 113.1
 Growth    -13%
 Net income (loss)
 18.4 (3.1)

QLogic Corp. announced its first quarter financial results for the period ended June 30, 2013.

During early June, the company commenced a restructuring plan designed to enhance product focus and streamline business operations with the goal of driving long-term profitable growth. As a result of the sharpened product focus, the company revised its product categories for revenue reporting. Effective this quarter, revenue is presented in two new categories – Advanced Connectivity Platforms and Legacy Connectivity Products. Net revenue from Advanced Connectivity Platforms and Legacy Connectivity Products for the last five quarters is presented in the accompanying supplemental financial information.

Financial Results
Net revenue for the first quarter of fiscal 2014 was $113.1 million compared to $130.4 million in the same quarter last year. Revenue from Advanced Connectivity Platforms was $93.2 million during the first quarter of fiscal 2014 compared to $108.0 million in the same quarter last year. Revenue from Legacy Connectivity Products was $19.9 million during the first quarter of fiscal 2014 compared to $22.3 million in the same quarter last year.

qlogic_fiscal_1q14_financial_results_540

Loss from continuing operations on a GAAP basis for the first quarter of fiscal 2014 was $(3.1) million, or $(0.03) per diluted share, compared to income from continuing operations of $18.4 million, or $0.19 per diluted share, for the first quarter of fiscal 2013. Loss from continuing operations on a GAAP basis for the first quarter of fiscal 2014 includes special charges of $12.0 million recorded in connection with the restructuring plan. Income from continuing operations on a non-GAAP basis for the first quarter of fiscal 2014 was $16.4 million, or $0.18 per diluted share, compared to $25.3 million, or $0.26 per diluted share, for the first quarter of fiscal 2013.

"I am very pleased with our execution and disciplined financial management during the first quarter. The restructuring activities are progressing according to our plan and we are sharply focused on the server and storage connectivity markets," said Jean Hu, interim CEO, SVP and CFO, QLogic. "With this market focus, I believe we are on the right track to drive the execution of new product opportunities and to deliver improved financial performance."

Comments

Abstracts the earnings call transcript:

Jean Hu, interim CEO and CFO:
"The restructuring activities included a workforce reduction, a consolidation of several engineering activities and to enhance the product development focus. One of the primary goals of the restructuring was to achieve a sharpened focus on the server and storage connectivity market where we have been, and continue to be mostly successful.
"After careful and comprehensive analysis, we decided to seize development of all future ASICs switch products. This decision included both future FC and the converged switch ASICs.
"Our cash and marketable securities were $432 million or nearly $5 per share at the end of the first quarter.
"As we mentioned during our last call, we expect revenue from FabricCache adapters to be modest in fiscal year 2014 and to grow thereafter.
"Now, I will wrap up with our near-term outlook for the second quarter of fiscal 2014. We expect total revenue to be in the range of $108 million to $116 million. At the midpoint, we expect revenue from Advanced Connectivity Platforms to be approximately flat sequentially, and the revenue from Legacy Connectivity Products to decline by approximately 6%. Gross margin is expected to be in the range of 67% to 68%, and operating expenses, I expect to be approximately $57 million."

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