Desai says next quarter's profit will fall between 36 cents and 39 cents per share, reflecting 1 to 2 percent revenue growth. Previously, the company expected up to 5 percent growth in revenues. Desai took the unusual step of giving guidance two quarters down the road in an effort to demonstrate the problem will be under control by then. He forecasts that within six months, profits could rise between 37 cents and 40 cents per share, representing 3 percent to 6 percent revenue growth.
Desai didn't name the OEM, but industry sources say it's likely Hitachi Global Storage Technologies (Hitachi GST), which is using QLogic chips in its new hard-disk drives (see Hitachi Picks QLogic I/O Chips).
In a conference call with analysts, Desai stressed the delayed revenues aren't related to QLogic's product quality. "This is not really a problem," he said. "This can happen sometimes in the hard-disk controller business... The problem is really a product transition, [the OEM] going from old drive to new drive. We expect this will start clearing up. It's not any product problems."
In other highlights of the quarter, QLogic's strong Fibre Channel HBA sales showed that this particular market segment has avoided the pricing pressures that have hurt Fibre Channel switch vendors. QLogic and Emulex Corp. (NYSE: ELX) continue to dominate the HBA space, while the entry of Cisco Systems Inc. (Nasdaq: CSCO) into the switch market has put pressure on McData Corp. (Nasdaq: MCDTA) and Brocade Communications Systems Inc. (Nasdaq: BRCD).
Looking ahead, Desai said QLogic's SANBox 5200 stackable switch aimed at small and medium-sized businesses is expected to launch late next quarter (see QLogic Gets Stacked). The company will continue to invest in 4-Gbit/s and 10-Gbit/s Fibre Channel as well as iSCSI, he said.
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