But not everyone was downbeat on Emulex's forecast. Shebly Seyrafi of A.G. Edwards reiterated his Buy rating on shares of Emulex. "As the leading player in a fast-growing category, we believe Emulex is poised to post strong rates of growth going forward," he wrote in a note today. "We are concerned about growth in FQ4 due to company guidance; however, there are several factors which could support growth," including the expectation that EMC Corp. (NYSE: EMC) and IBM Corp. (NYSE: IBM) -- two key OEMs -- will be up sequentially.
Meanwhile, Emulex executives said its Thor dual-channel 2-Gbit/s Fibre Channel controller chip is "in OEMs' hands today" but would not speculate on when it might be generally available in systems from those partners. Folino said Thor is "complementary" to the application-specific integrated circuits (ASICs) it plans to co-develop with Intel Corp. (Nasdaq: INTC), due out in 2004, and he noted that Emulex is still a partner with LSI Logic Corp. (NYSE: LSI) -- at least, for now -- which supplies components for the Thor chip (see Intel, Emulex Join at the Chip and Emulex Debuts 'Thor').
Emulex CFO Mike Rockenbach also briefly discussed the new corporate headquarters the company is building in Costa Mesa, Calif. He said its construction will cost about $40 million over an 18-month period; Emulex is shooting to move in to the new building by the end of the year.
In addition, Emulex announced yesterday that it has reached a tentative settlement of class-action shareholder lawsuits that were filed in 2001. The company will pay $39.5 million in exchange for all claims to be dismissed and will record a receivable for approximately 32 percent of that amount, with an after-tax charge of about $16.7 million to be recorded in the third fiscal quarter (see Emulex Settles Shareholder Suits).
Todd Spangler, US Editor, Byte and Switch
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