QLogic: Fiscal 4Q14 Financial Results

(in $ million)	4Q13	4Q14	FY13	FY14
Revenue	116.9	115.7	484.5	460.9
*Growth*		-1%		*-6%*
Net income (loss)	29.6	(46.8)	73.1	(8.3)

QLogic Corp. announced its financial results for the fourth quarter and fiscal year ended March 30, 2014.

Net revenue for the fourth quarter of fiscal 2014 was $115.7 million, compared to $116.9 million in the same quarter last year, and included approximately $1 million of revenue associated with the NetXtreme II Ethernet business that was acquired from Broadcom Corporation in March 2014.

Revenue from Advanced Connectivity Platforms increased to $101.1 million in the fourth quarter of fiscal 2014 from $97.0 million in the same quarter last year.

Revenue from Legacy Connectivity Products was $14.6 million during the fourth quarter of fiscal 2014 compared to $19.9 million in the same quarter last year.

“I am very pleased with our execution and financial performance during the fourth quarter. We delivered net revenue above the midpoint of our guidance range. In addition, we achieved non-GAAP income from continuing operations per diluted share at the high end of our guidance range,” said Prasad Rampalli, president and CEO, QLogic. “The acquisition of the NetXtreme II Ethernet business from Broadcom is both strategic and financially compelling, and positions QLogic for expanded market opportunities. We expect total revenue to grow between 10% and 12% during fiscal 2015.”

Loss from continuing operations on a GAAP basis for the fourth quarter of fiscal 2014 was $46.8 million, or $0.54 per diluted share, compared to income from continuing operations of $29.6 million, or $0.33 per diluted share, for the fourth quarter of fiscal 2013.

Loss from continuing operations on a GAAP basis for the fourth quarter of fiscal 2014 included $56.5 million of special charges and $14.7 million of incremental tax charges. The special charges are comprised of $15.5 million related to restructuring activities and $41.0 million for the portion of a license payment attributed by the company to the use of the related technology in a period prior to the date of the previously announced patent license agreement.

The incremental tax charges consisted of valuation allowances related to deferred tax assets for state tax credits and net operating loss carryforwards. Income from continuing operations on a non-GAAP basis for the fourth quarter of fiscal 2014 increased to $20.8 million, or $0.24 per diluted share, from $15.6 million, or $0.17 per diluted share, for the fourth quarter of fiscal 2013.

Net revenue for fiscal 2014 was $460.9 million compared to $484.5 million in fiscal 2013.

Loss from continuing operations on a GAAP basis for fiscal 2014 was $18.3 million, or $0.21 per diluted share, compared to income from continuing operations of $73.6 million, or $0.78 per diluted share in fiscal 2013. Income from continuing operations on a non-GAAP basis for fiscal 2014 increased to $82.8 million, or $0.94 per diluted share, from $76.1 million, or $0.81 per diluted share in fiscal 2013.

Comments

Jean Hu, CFO:
"Our cash and marketable securities were $278 million or more than $3 per share at the end of the fourth quarter.
"For the first quarter of fiscal 2015, we expect revenue to be in the range of $116 million to $122 million. At the midpoint, we expect revenue from Advanced Connectivity Platforms to be up approximately 4% sequentially and 13% year-over-year. This include approximately $11 million of revenue for our NetXtreme II Ethernet product. We expect revenue from Legacy Connectivity Product to be approximately $14 million."

Prasad Rampalli, president and CEO:
"(...) we have moved aggressively to fill the void left by PMC Sierra in the target storage connectivity market. We currently have nearly 60 design wins in this important growth market.
"We have shipped more than 15 million fiber channel ports.
"In February, we announced our 10th consecutive year of FC adapter market share leadership as confirmed by recent market share reports from both the Dell'Oro Group and Crehan Research. In calendar year 2013, QLogic held a total revenue share of 54.1% according to the Dell'Oro Group, and both sources confirmed that QLogic led its nearest competitor by more than 12 percentage points. In addition, QLogic was the only company to show year-over-year growth on market share gains in both reports. Two additional accomplishments for 2013 are noteworthy. First, in the important 16Gb Gen 5 FC adapter market, QLogic gained more than 17% points in revenue market share from calendar year 2012 to 2013. Second, during 2013, we surpassed the 15 million mark in all-time shipments of FC adapter ports, over 3 million more than our nearest competitor. Based on our March quarter results and the recently announced results from our nearest competitor, we are very confident that we have gained significant FC adapter market share during the March quarter."