QLogic: Fiscal 2Q14 Financial Results

(in US$ million)	2Q13	2Q14	6 mo. 13	6 mo. 14
Revenues	117.9	112.6	248.2	225.7
*Growth*		-4%		*-9%*
Net income (loss)	11.9	11.0	30.3	7.9

QLogic Corp. announced its second quarter financial results for the period ended September 29, 2013.

Second Quarter Highlights

Net revenue: $112.6 million
GAAP income from continuing operations: $11.0 million or $0.13 per diluted share
Non-GAAP income from continuing operations: $20.0 million or $0.23 per diluted share
Operating margin: 11.7% GAAP, 20.1% non-GAAP
Cash and marketable securities: $433.0 million as of September 29, 2013
Cash generated from operations: $24.1 million

Financial Results
Net revenue for the second quarter of fiscal 2014 was $112.6 million compared to $117.9 million in the same quarter last year.

Revenue from Advanced Connectivity Platforms was $94.0 million during the second quarter of fiscal 2014 compared to $97.4 million in the same quarter last year. Revenue from Legacy Connectivity Products was $18.6 million during the second quarter of fiscal 2014 compared to $20.5 million in the same quarter last year.

Income from continuing operations on a GAAP basis for the second quarter of fiscal 2014 was $11.0 million, or $0.13 per diluted share, compared to $11.8 million, or $0.13 per diluted share, for the second quarter of fiscal 2013. Income from continuing operations on a GAAP basis for the second quarter of fiscal 2014 includes $4.3 million of special charges recorded in connection with the restructuring plan that commenced in June 2013. Income from continuing operations on a non-GAAP basis for the second quarter of fiscal 2014 increased to $20.0 million, or $0.23 per diluted share, from $16.8 million, or $0.18 per diluted share, for the second quarter of fiscal 2013.

“Last quarter we announced a restructuring plan aimed at improving our focus, execution and financial performance. I am very pleased with our progress and sharper focus on the server and storage connectivity markets. In addition, our execution has improved and we are delivering more consistently on new programs and products, as demonstrated by achieving availability for more than a dozen new OEM programs since early September,” said Jean Hu, interim CEO, SVP and CFO, QLogic. “I am also very pleased with our financial performance during the second quarter. We are ahead of plan on our expense reduction activities and are already seeing the benefits in our financial results and operating margin.”

Comments

Abstracts the earnings call transcript: Jean Hu, CFO and interim CEO: "Our cash and marketable securities was $433 million or nearly $5 per share at the end of the second quarter. "We are confident that we're on track for our 10th consecutive year for FC adapter share leadership for calendar year 2013, a position we earned and have maintained since 2004. QLogic has shipped over 14 million FC adapter pods, which is a significant majority of the total pods shipped, over 10 share points greater than our nearest competitor. "Now our near-term outlook for the third quarter of fiscal 2014. We continue to be cautious about the demand from our enterprise server customers. However, we are seeing an improved outlook for our adapter and the Silicon Products from our storage customers. We're encouraged by the positive trends in our Advanced Connectivity Platforms, which we expect to achieve meaningful sequential revenue growth in the third quarter. "Overall, we expect total revenue to be in the range of $114 million to $120 million. At the midpoint, we expect revenue from Advanced Connectivity Platforms to be up approximately 6% sequentially, and the revenue from Legacy Connectivity Products to decline by approximately 5% sequentially."