Emulex approves $200M stock buyback, new cost cuts

Emulex OKs $200M stock buyback and $20M in new cost cuts; says chairman will leave in Feb.

Associated Press

COSTA MESA, Calif. (AP) -- Data and networking equipment company Emulex Corp. said Monday it plans to buy back $200 million in stock and eliminate an additional $20 million in spending.

The company also said Chairman Jim McCluney will leave the company in February.

Emulex said it will return $100 million to shareholders through an accelerated stock repurchase program and individually negotiated transactions. It expects to complete the accelerated repurchase by the end of its current fiscal year in September. The company will start another $100 million share buyback immediately after that.

The company is conducting a $125 million sale of convertible notes to help finance the stock repurchase program. The notes are due in 2018, and the company said some of the funds will be used for other corporate purposes. The buyer will have the option to buy another $18.8 million in notes to cover any over-allotments.

Emulex Corp. shares rose 5 cents to $7.54 on Monday and gained another 6 cents in extended trading. Based on current prices the company said the buyback will repurchase about 30 percent of its outstanding shares.

Emulex now plans to eliminate $30 million in total costs compared to fiscal 2013. The company had earlier said it planned to cut $10 million in costs from its connectivity business. It expects to get full benefit of the cuts in fiscal 2015.

Emulex said McCluney, who became company chairman in July, will remain chairman until Feb. 6 and then leave in accordance with his contract. He will not run for another term on the board of directors. Emulex also said it will reduce the size of its board to 11 directors from 12, and said it is interviewing industry experts to find candidates to fill three independent director positions.

McCluney became Emulex's CEO in 2006. He gave up that role in July, when Jeffrey Benck was named CEO.

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