QLogic: Fiscal 3Q14 Financial Results

(in US$ million)	3Q13	3Q14	9 mo. 13	9 mo. 14
Revenues	119.4	119.4	367.6	345.2
*Growth*		0%		*-6%*
Net income (loss)	13.2	20.6	43.5	28.5

QLogic Corp. announced its third quarter financial results for the period ended December 29, 2013.

Third Quarter Highlights

Net revenue: $119.4 million
GAAP income from continuing operations: $20.6 million or $0.24 per diluted share
Non-GAAP income from continuing operations: $25.6 million or $0.29 per diluted share
Operating margin: 17.0% GAAP, 23.1% non-GAAP
Cash and marketable securities: $462.4 million as of December 29, 2013
Cash generated from operations: $37.4 million

Financial Results
Net revenue of $119.4 million for the third quarter of fiscal 2014 was consistent with the net revenue reported in the same quarter last year. Revenue from Advanced Connectivity Platforms increased to $98.5 million in the third quarter of fiscal 2014 from $97.0 million in the same quarter last year. Revenue from Legacy Connectivity Products was $21.0 million during the third quarter of fiscal 2014 compared to $22.4 million in the same quarter last year.

Income from continuing operations on a GAAP basis for the third quarter of fiscal 2014 increased to $20.6 million, or $0.24 per diluted share, from $13.7 million, or $0.15 per diluted share, for the third quarter of fiscal 2013. Income from continuing operations on a non-GAAP basis for the third quarter of fiscal 2014 increased to $25.6 million, or $0.29 per diluted share, from $18.3 million, or $0.20 per diluted share, for the third quarter of fiscal 2013.

“During the third quarter, we delivered strong financial results, including non-GAAP earnings per diluted share that exceeded our original guidance range,” said Jean Hu, interim CEO, SVP and CFO, QLogic. “We are very pleased with our continued focus and execution. As a result of our restructuring activities earlier in the year, we have continued our sharper focus on the server and storage connectivity markets and are now operating more effectively and efficiently as reflected in our financial results.”

Comments

Jean Hu, interim CEO and CFO:
"We acquired Brocade's Fibre Channel and converged network adapter business for $10 million.
"Our third quarter revenue from Advanced Connectivity Platforms, which are comprised primarily of adapters and silicon for server and storage connectivity application was $98.5 million, up from the $97 million recorded in the third quarter of last year. Third quarter revenue from Legacy Connectivity Products, which are comprised primarily of switch products and 1-gig iSCSI products, was $21 million, compared to $22.4 million recorded in the third quarter of last year. Our third quarter gross margin of 68.2% was above the 67.9% gross margin achieved in the third quarter of last year, primarily due to a favorable product mix.
"Moving to our near term outlook for the fourth quarter of fiscal 2014. Overall, we expect total revenue to be in the range of $110 million to $116 million. At the midpoint, we expect revenue from Advanced Connectivity Platforms to be down approximately 2% sequentially. This improved incremental revenue approximately $2 million associated with acquisition of the Brocade adapter business. We expect revenue from Legacy Connectivity Products to be in the range of $15 million to $17 million."