However, for the June quarter, Emulex projected revenue in the range of $80 million to $82 million, which would be at most a 3 percent sequential uptick and below analyst expectations. The company did not provide guidance for the rest of 2003.
Paul Folino, Emulex's chairman and CEO, told analysts on a conference call yesterday that the company was being conservative in its outlook because of many macroeconomic factors beyond its control.
"You've heard this story before," he said. "The geopolitical environment out there, the economy, questions of whether Bush's tax package will get implemented now -- there are so many variables at an economic level, et cetera, that we're going to continue to be very conservative on how we approach guidance on the revenue line."
Several analysts took away from Emulex's muted guidance that the company -- which controls about half of the Fibre Channel HBA market, followed by QLogic Corp. (Nasdaq: QLGC) in a strong second place -- has tapped out its high-growth potential and is now in danger of potentially losing market share.
"The potential for OEM share loss remains a concern for us," wrote RBC analyst Steve Denegri in a note today. Specifically, RBC believes Emulex could lose business with Hewlett-Packard Co. (NYSE: HPQ), which is expected to phase out legacy Compaq Tru64 Unix customers in favor of the HP-UX server line, "where Emulex has no HP design win presence."
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