QLogic CorporationQLGC

Morningstar Rating

Stock Research and Analysis

by Joseph Beaulieu

QLogic produces key components used in data storage networks for large original-equipment manufacturers and independent resellers. The company designs both the silicon and software for its host bus adapters (HBAs); these highly intelligent input/output Read more

Bulls Say

A growing trend toward server virtualization has increased the need for storage and data management. This should drive demand for storage networks and QLogic's products that are key to these networks.

QLogic's channel business now accounts for nearly a third of revenue. As the channel business grows, QLogic will become less dependent on its powerful OEM customers.

Fibre channel over Ethernet technology allows servers to connect to storage using the same network as Ethernet traffic. This should protect the firm's large installed base of fibre-channel components. Read more

Bears Say

QLogic's OEM customers exert tremendous pricing pressure. Prices should continue to erode as new competitors and alternate technologies give OEMs more choices for storage management.

We expect switch revenue to grow faster than HBA revenue. The resulting shift in product mix may result in lower gross margins for QLogic.

Rapid changes in storage network technology leads to short product cycles. If QLogic were to miss a cycle, revenue could tumble. Read more

Strategy

QLogic invests heavily in research and development in order to keep up with rapidly changing storage technologies. The company has diversified its product line in an effort to provide platform-agnostic Read more

Management

H.K. Desai became CEO in 1995 and also serves as chairman of the board; we prefer to see these roles split. While Desai's fiscal 2008 base salary of $700,000 was on the high end relative to his peers, we believe that QLogic's impressive financial performance Read more

Profile

QLogic supplies a wide range of components and subsystems for computer storage networks, including controller cards, routers, switches, and chips. Customers include OEMs, Read more

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