Emulex falls as outlook underlines growth worries

Stock Market Predictions

(Global Markets) - Shares of Emulex Corp (ELX.N) fell as much as 9 percent, a day after the network equipment maker warned of slowing sales and projected a weaker-than-expected first quarter.

At least three brokerages slashed their target price on the company's stock on Friday, as the outlook underscored the weakness in the broader storage and networking market.

For the first quarter, the company said it expects to earn 10-12 cents a share on revenue of $114-$118 million. Analysts on average were looking for a 15 cent a share profit on $123.4 million in revenue, according to Thomson Global Markets I/B/E/S.

"The company is an important component maker for data center network connectivity, but we point out Emulex's revenue trends appear to be trailing broader server and storage trends," said J.P. Morgan analyst Mark Moskowitz, who cut his target price on the company's stock to $9.

Costa Mesa, California-based Emulex, whose main customer IBM (IBM.N) contributes a third of its sales, makes network infrastructure for storage and data center customers. The company competes with QLogic (QLGC.O) and Brocade communications (BRCD.O).

Shares of the company, fell as much as 9 percent in early trading. They were down 6 percent at $6.85 on Friday on the New York Stock Exchange.

(Reporting by Himank Sharma in Bangalore; Editing by Saumyadeb Chakrabarty)