Third Quarter Highlights
-- Net revenue was a record $158.0 million.
-- Net income: $31.9 million GAAP, $41.0 million non-GAAP.
-- Net income per diluted share: $0.23 GAAP, $0.30 non-GAAP.
-- Cash generated from operations was $59.8 million.
-- $378.4 million in cash and short-term marketable securities as of December 30.
-- Repurchased $63.5 million of outstanding common stock.
Net revenue for the third quarter of fiscal 2008 was a record $158.0 million. Revenue from Host Products, which are comprised primarily of Fibre Channel and iSCSI Host Bus Adapters (HBAs) and InfiniBand Host Channel Adapters (HCAs), was $118.9 million during the third quarter of fiscal 2008 and increased 4% from $114.6 million in the comparable quarter last year. Revenue from Network Products, which are comprised primarily of Fibre Channel and InfiniBand switches, was $27.8 million during the third quarter of fiscal 2008 and increased 17% from $23.8 million in the comparable quarter last year. Revenue from Silicon Products, which are comprised primarily of protocol chips and management controllers, was $9.3 million during the third quarter of fiscal 2008 and decreased 46% from $17.0 million for the comparable quarter last year.
Net income on a GAAP basis for the third quarter of fiscal 2008 was $31.9 million, or $0.23 per diluted share, and included stock-based compensation expense, acquisition-related charges, and the related income tax effects. Net income on a GAAP basis for the third quarter of fiscal 2007 was $35.5 million, or $0.22 per diluted share, and included stock-based compensation expense, acquisition-related charges, and the related income tax effects. Net income on a non-GAAP basis for the third quarter of fiscal 2008 was $41.0 million, or $0.30 per diluted share.
"We are very pleased with our overall financial performance during the third quarter. We achieved record revenue of $158 million, which increased 13% sequentially from the September quarter," said H. K. Desai, QLogic's chief executive officer. "Our strong revenue performance during the quarter was driven by a 13% sequential increase in revenue from Fibre Channel HBAs and a greater than 20% sequential increase for both Fibre Channel and InfiniBand switch products."
QLogic uses certain non-GAAP financial measures to supplement financial statements based on GAAP. A summary of these non-GAAP financial measures and a reconciliation of each non-GAAP financial measure to the most directly comparable GAAP financial measure, as well as a description of the reasons that management believes that these non-GAAP financial measures provide useful information to investors and the additional purposes for which management uses these non-GAAP financial measures is presented in the accompanying financial schedules.
QLogic's fiscal 2008 third quarter conference call is scheduled for today at 2:30 p.m. Pacific Time (5:30 p.m. Eastern Time). H. K. Desai, chief executive officer, and Tony Massetti, senior vice president and chief financial officer, will host the conference call. The call is being webcast live via the Internet at www.qlogic.com and www.earnings.com. Phone access to participate in the conference call is available at (913) 312-6685, pass code: 8417136.
The financial information that the company intends to discuss during the conference call will be available on the company's website at www.qlogic.com for twelve months following the conference call. A replay of the conference call will be available via webcast at www.qlogic.com for twelve months.
QLogic is a leading supplier of high performance storage networking solutions, which include the controller chips, host adapters and fabric switches that are the backbone of storage networks for most Global 2000 corporations. The company delivers a broad and diverse portfolio of products that includes Fibre Channel HBAs, blade server embedded Fibre Channel switches, Fibre Channel stackable switches, iSCSI HBAs and iSCSI routers. The company is also a leading supplier of InfiniBand switches and InfiniBand host channel adapters for the emerging high performance computing market. QLogic products are delivered to small-to-medium businesses and large enterprises around the world via its channel partner community. QLogic products are also powering solutions from leading companies like Cisco, Dell, EMC, Hitachi Data Systems, HP, IBM, Network Appliance and Sun Microsystems. QLogic is a member of the S&P 500 Index.
Note: All QLogic-issued press releases appear on the company's website (www.qlogic.com). Any announcement that does not appear on the QLogic website has not been issued by QLogic.
Disclaimer - Forward Looking Statements
This press release contains statements relating to future results of the company (including certain beliefs and projections regarding business trends) that are "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected or implied in the forward-looking statements. The company advises readers that these potential risks and uncertainties include, but are not limited to: potential fluctuations in operating results; gross margins that may vary over time; revenues may be affected by changes in IT spending levels; the stock price of the company may be volatile; the company's dependence on the storage area network market; potential adverse effects of server virtualization technology on the company's business; potential adverse effects of increased market acceptance of blade servers; the ability to maintain and gain market or industry acceptance of the company's products; the company's dependence on a limited number of customers; seasonal fluctuations and uneven sales patterns in orders from customers; the company's ability to compete effectively with other companies; declining average unit sales prices of comparable products; a reduction in sales efforts by current distributors; dependence on sole source and limited source suppliers; the company's dependence on relationships with certain silicon chip suppliers; the complexity of the company's products; sales fluctuations arising from customer transitions to new products; environmental compliance costs; international economic, regulatory, political and other risks; uncertain benefits from strategic business combinations; the ability to attract and retain key personnel; difficulties in transitioning to smaller geometry process technologies; the ability to protect proprietary rights; the ability to satisfactorily resolve any infringement claims; reliance on third party technology; the use of "open source" software in our products; changes in our tax provisions or adverse outcomes resulting from examination of our income tax returns; computer viruses and other tampering with the company's computer systems; and facilities of the company and its suppliers and customers are located in areas subject to natural disasters.
More detailed information on these and additional factors which could affect the company's operating and financial results are described in the company's Forms 10-K, 10-Q and other reports filed, or to be filed, with the Securities and Exchange Commission. The company urges all interested parties to read these reports to gain a better understanding of the business and other risks that the company faces. The forward-looking statements contained in this press release are made only as of the date hereof, and the company does not intend to update or revise these forward-looking statements, whether as a result of new information, future events or otherwise.
QLogic and the QLogic logo are registered trademarks of QLogic Corporation. Other trademarks and registered trademarks are the property of the companies with which they are associated.
QLOGIC CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME (unaudited -- in thousands, except per share amounts) Three Months Ended Nine Months Ended ------------------ ----------------- December December December December 30, 31, 30, 31, 2007 2006 2007 2006 --------- -------- -------- -------- Net revenues $158,040 $157,611 $438,143 $439,601 Cost of revenues 52,237 50,698 152,113 139,774 --------- -------- -------- -------- Gross profit 105,803 106,913 286,030 299,827 --------- -------- -------- -------- Operating expenses: Engineering and development 33,174 34,003 100,916 99,542 Sales and marketing 20,292 21,586 62,104 64,095 General and administrative 8,260 7,238 25,250 23,274 Special charges -- -- 3,772 -- Purchased in-process research and development -- -- -- 1,910 --------- -------- -------- -------- Total operating expenses 61,726 62,827 192,042 188,821 --------- -------- -------- -------- Operating income 44,077 44,086 93,988 111,006 Interest and other income, net 4,866 5,646 16,885 18,332 --------- -------- -------- -------- Income before income taxes 48,943 49,732 110,873 129,338 Income taxes 17,073 14,278 37,428 42,361 --------- -------- -------- -------- Net income $ 31,870 $ 35,454 $ 73,445 $ 86,977 ========= ======== ======== ======== Net income per share: Basic $ 0.23 $ 0.22 $ 0.51 $ 0.55 Diluted $ 0.23 $ 0.22 $ 0.50 $ 0.54 Number of shares used in per share calculations: Basic 136,836 158,532 144,932 159,516 Diluted 137,421 160,760 145,614 161,161