Friday, February 1, 2013

Why Emulex Shares Plunged

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Emulex (NYSE: ELX  ) plunged today by as much as 10%, after the company reported earnings.

So what: Revenue in the quarter was $122.1 million, down 5% from the prior year, which was slightly ahead of analyst forecasts. Non-GAAP earnings per share came in at $0.19, which was a penny shy of consensus estimates.

Now what: During the quarter, Emulex said it would acquire Endace Limited. Outlook for the current quarter disappointed investors, though, with revenue expected in the range of $110 million to $114 million. Adjusted earnings per share should be $0.12 to $0.14. Analysts thought $117.5 million in sales, and a $0.16 per share profit, was in order.

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