QLogic shares move higher after 2Q profit beat

QLogic shares rise 5 percent after 2nd-quarter earnings beat, conservative forecast

• On 2:48 pm EDT, Thursday October 22, 2009

ALISO VIEJO, Calif. (AP) -- Shares of network equipment maker QLogic Corp. rose more than 5 percent Thursday after the company's results beat fiscal second-quarter profit estimates and it gave a conservative forecast.

Shares added 97 cents, or 5.4 percent, at $19.05 in afternoon trading.

Late Wednesday QLogic reported revenue of $131.5 million and adjusted earnings of 21 cents per share, beating analysts' average estimates of $125.7 million in revenue and 18 cents of earnings per share.

The company cited strength in its host products segment, which rose 6 percent sequentially from the first quarter, and said it is "cautiously optimistic" given signs of stability and early indicators of recovery.

Morgan Keegan analyst Harsh Kumar reiterated an "Outperform" rating on the stock and raised his profit outlook for the year to March to 85 cents per share from 75 cents.

"We feel that QLogic is likely to benefit from the continued server refresh which is expected to continue into calendar 2010 and that it is better positioned than its closest competitors," he wrote in a research note.

RBC Capital Markets analyst Amit Daryanani also maintained an "Outperform" rating on QLogic.

He cited conservative company revenue guidance for the December quarter of an increase of 4 percent from the September quarter, about half the normal seasonal gain, solid operating margins and continued spending by companies to update their servers with Intel Corp.'s Nehalem line.

"We continue to believe a multitude of tail winds are working in QLogic's favor," he wrote in a note Thursday.

Buzz up!