Emulex: Fiscal 1Q15 Financial Results
FC and Ethernet solutions at $76 million or 73% of global revenue
This is a Press Release edited by StorageNewsletter.com on November 3, 2014 at 2:54 pm| (in $ million) | 1Q14 | 1Q15 | Growth |
| Revenue |
114.8 | 103.8 | -10% |
| Net income (loss) | (3.6) | (0.7) |
Emulex Corporation announced earnings results for the first quarter of fiscal 2015 ending September 28, 2014.
First Quarter Financial Highlights
- Total revenue of $104 million, up 4% sequentially and above the $93 million to $99 million initial guidance range provided in our fiscal fourth quarter earnings call, driven by strength in Network and Storage Connectivity products.
- Non-GAAP diluted earnings of $0.14 and a GAAP loss of $0.01 per share as compared to guidance of $0.07 – $0.11 on a non-GAAP basis and a $0.07 – $0.11 loss on a GAAP basis.
- Non-GAAP operating income of $13 million, up 90% versus the prior quarter, reflecting stronger revenue performance, consistent non-GAAP gross margin, and operational discipline.
- Generated $21 million in cash from operations in the quarter with an ending cash, cash equivalents, and investments balance of $174 million.
“We entered our fiscal 2015 on strong footing, with solid performance across multiple categories including our Ethernet and FC products, allowing us to outperform versus expectations,” commented Jeff Benck, president and CEO, Emulex. “Over the past forty-five days we have launched an unprecedented number of OEM and ODM design wins for our Connectivity products, designed to meet the performance requirements of Grantley-based servers, with more to come. We look forward to seeing these enterprise products ramp in the market over the coming year.
“While a number of things went well for us in the quarter, our Network Visibility Products (NVP) Division requires additional attention. To that end, we recently appointed industry veteran Ali Hedayati as SVP and GM of NVP, reporting directly to me. I fully expect with Ali’s proven business management and segment experience that NVP will benefit from his leadership,”
Business Outlook
Emulex is forecasting second quarter net revenue in the range of $102 – $108 million. The company expects second quarter non-GAAP earnings of $0.14 – $0.18 and a GAAP loss of $0.04 to breakeven per share. GAAP estimates for the second quarter reflect approximately $0.18 per diluted share in expected expense arising primarily from amortization of intangibles, stock-based compensation, royalties, mitigation expenses and license fees associated with the Broadcom patent litigation, the accretion of debt discount on outstanding convertible senior notes, and the tax effects and the impact of our U.S.
First Quarter Business Highlights
- Secured design wins with 10/20/40GbE and Converged Network and 8/16Gb FC products optimized for the high performance needs of the next generation Intel Grantley-based platforms introduced by major OEMs and ODMs including Dell PowerEdge 13th generation servers, HP ProLiant Gen9 servers, IBM System x and BladeCenter servers, Lenovo ThinkServer family, Fujitsu Primergy RX, TX, BX and CX rack, tower, blade, and scale-out servers; Quanta QuantaGrid, QuantaPlex and Rackgo X servers.
- Joined the 25Gb Ethernet Consortium, reiterating the commitment to develop interoperable 25GbE solutions that increase the performance of data center networks
- Introduced the OpenWorks Connector for the new OneConnect OCec14000 Cloud Adapters, for bare metal adapter configuration management and provisioning/deployment in scale-out cloud environments
Comments
Abstracts of the earnings call transcript:
Kyle Wescoat, CFO:
"Network Connectivity Products or NCP is our largest product line, consisting of our Fibre Channel and Ethernet solutions used to interconnect servers and storage, as well as Ethernet network interface. NCP revenue of $76 million was 73% of total revenue, down 3% year-over-year and flat compared to the June quarter.
"Storage Connectivity and Other Products or SCOP, consists of our bridges and back-end connectivity products, baseboard management controllers and other miscellaneous products. Overall, SCOP revenue came in at $22 million or 21% of total revenue. As we've mentioned in the past, elements of the SCOP portfolio are facing end of life. We expect to translate into annual decline of 30% or more in this product group. As you might expect, this will not be a perfectly linear decline, as evidenced by better than expected performance in the September quarter, with SCOP revenue down 17% year-over-year or approximately half the annual projected rate. However, it is important point out that had has SCOP performed at our previously forecasted rate of decline, total revenues would have still exceeded both consensus of $96 million and the high end of our previously forecasted range of $99 million."
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