Shares of Costa Mesa’s Emulex Corp., a maker of electronics for data storage networks, fell Monday after an analyst downgraded the stock.
The stock was down 4% at the close of trading on Monday, with a market value of $1.2 billion.
Wachovia Corp. analyst Aaron Rakers said the company could fall short of expectations for the June quarter because its biggest customers, IBM Corp. and EMC Corp., may have scaled back their orders, according to an Associated Press report.
EMC and IBM made up nearly half of Emulex’s $131 million in sales during the December quarter.
Rakers lowered his rating to “market perform” from “outperform,” the report showed.
He reduced his earnings estimate for the June quarter to $24 million, down from his previous estimate of $28 million.
On average, analysts are looking for profits of $26 million on sales of $133 million.
Emulex’s biggest rival, Aliso Viejo-based QLogic Corp., also saw a downgrade last week.
On Thursday, J.P. Morgan analyst Mark Moskowitz downgraded QLogic to “underweight” from “neutral.”
Together, the Emulex and QLogic hold more than 80% of the market for a profitable bit of electronics called host bus adapters that speed the flow of data on a network.
Moskowitz said the company could lose market share for host bus adapters, according to an Associated Press report.
He said that storage companies like QLogic that don’t see at least 7% to 10% annual sales growth are at risk of worrying investors and seeing their stocks fall.
Emulex’s shares are down about 6% since the start of the year.
Shares of QLogic, which had a recent market value of about $2 billion, are up about 12% for the same period.
