Emulex Slaughtered Amid Broad Tech Sell-Off
By Cindy Christ

Emulex Corp. took a beating Friday after posting record Third quarter results as investors fled technology shares en masse.

Shares in Emulex (EMLX) plunged $41.25, or 49.7 percent, to $41.69.

After the close Thursday, the world's No. 1 supplier of fibre channel adapters reported revenues for the March quarter of $36.5 million, up 100 percent from $18.2 million a year ago.

Net income rose to $7.7 million or 20 cents per share compared to $978,000 or 4 cents per share last year, a 680 percent jump.

Gross margins also expanded sequentially from 47 percent in the second quarter to 48 percent in the third.

"Emulex's momentum continued to be driven by expanding sales of fibre channel adapters which grew 13 percent sequentially, while fibre channel backlog expanded 30 percent sequentially," said Paul F. Folino, Emulex president and CEO, in a statement.

Fibre channel equipment is used in computer networking systems to store and access electronic data.

Although Emulex beat Street expectations by 2 cents per share, investors were disappointed the company didn't match more optimistic "whisper" numbers.

Analysts also expressed concern about slowing sales growth going forward.

The company said sales of its traditional network products, which slid 20 percent from a year ago, continue to mature.

Costa Mesa, Calif.-based Emulex lists some of the world's biggest technology companies among its clients, including Compaq Computer, EMC, Fujitsu-Siemens, Hitachi, NEC and Unisys.

Analysts said in spite of Friday's decline, Emulex's long-term business prospects remain strong.

After today's debacle, Emulex shares are trading more than 80 percent below their 52-week high of $225.50 reached March 27.