Notes from QLogic Q2’10 Earnings Call

As usual, Intel’s earnings were a bellwether for the high tech market.  Since their positive earnings last week, Apple, EMC, VMware and now QLogic have had solid earnings.

Summary of Remarks from QLogic CEO H.K.Desai

QLogic reported a Net Revenue of $142.6M, “a 16% increase in net revenue and a significant increase in profitability from the first quarter of last year” and seeing growth on FC HBAs, InfiniBand and Converged Network products. Gross Margin corporate average sits around 65% (forecast for the next quarter is 65.5%-66%).  Some general macro economic “nervousness”, especially in Europe.

Three strategic initiatives which Desai says that QLogic is investing aggressively in:

  • Converged Networks
  • InfiniBand
  • Fibre Channel

Converged Networks

QLogic broke out their converged network revenue, coming in at $10M for the quarter (primarily CNAs and a small amount of silicon).  The converged network market is only starting to ramp up, it’s a bold move by QLogic to share these numbers.  Emulex has been claiming market leadership, now it needs to share numbers (Emulex earnings is on Aug 5th) or QLogic will claim the lead.

Desai is encouraged by trends in host and network products.  Server upgrade cycle from 2009 is continuing as OEMs introduce their Nehalem-based servers which moves customers to newer high bandwidth HBA and CNA products.

Desai mentioned that Oracle began revenue shipment of QLogic CNAs.  QLogic has long been a supplier of FC for Sun, but this is the first that I’ve heard of Oracle supporting FCoE.  As I wrote on the Wikibon wiki, “The battle for the vendors is to get OEM design wins with server manufacturers and the acceptance of customers who adopt the next generation 10Gb Ethernet based solutions.”  Oracle is working to vertically integrating their stack and this design win by QLogic is significant (especially if it is exclusive, some vendors do dual source, but Sun tended to single-source).

Additional design wins from the quarter include HP Virtual Connect Flex Fabric which Dave Vellante posted about last month and CNA support with HDS in April.

QLogic claims design wins with all major OEMs including IBM, NetApp, EMC, Dell, HP, Cisco, Hitachi, Oracle and QLogic-branded for partners.

Fibre Channel and InfiniBand

FC HBA 55.2% revenue share, an increase of 2.1% from previous quarter.

QLogic started shipping InfiniBand HCA adapters through Voltaire.  The IB market has had good growth rate in the HPC market.

From Q&A:

Desai said that QLogic is not seeing a shift in storage market from FC to IB, but that FC and FCoE together is where they see the storage market making purchases.

QLogic is interested in being a general supplier for 10Gb Ethernet, whether a solution with FCoE, iSCSI or as a general purpose NIC.

Even with LOMs, QLogic expects that people will still need to buy additional adapters since they always run out of connectivity.

For official QLogic information, go to http://ir.qlogic.com

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