QLogic indicated its quarterly shortfall was due to decline in orders from two OEMs. Analysts believe Sun Microsystems Inc. (Nasdaq: SUNW) was one of the OEMs, and perhaps Hewlett-Packard Co. (NYSE: HPQ) was the other. That wasn't the case with Emulex, though. Emulex's large OEMs EMC Corp. (NYSE: EMC) and IBM Corp. (NYSE: IBM) each posted strong earnings for the quarter (see EMC Earnings Up and Storage Computer Loses in Q4).
On the plus side, Emulex raised its gross margins to 64 percent, up from 63 percent last quarter. Folino attributed the increase in gross margin to a new, cheaper manufacturing subcontractor and favorable product mix.
Embedded switch products from Emulex's acquisition of Vixel last year contributed over 10 percent to the company's total revenue, which helped make up for the sequential decine of HBAs (see 2003 Top Ten: Mergers & Acquisitions). Emulex executives consider the embedded market a big growth opportunity along with the SMB market over the next few years, and say they are ahead of schedule with Vixel sales. They refused to say the exact percentage of sales from Vixel switches, though.
Dave Raffo, Senior Editor, Byte and Switch
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