The outlook for Costa Mesa’s Emulex Corp., a maker of devices for data storage networks, is looking a little dimmer these days.
Shares are down some 33% since the start of the year on a recent market value of about $870 million.
The company cut its expectations for the June quarter a few weeks ago.
The forecast is a sharp contrast to local rival Aliso Viejo-based QLogic Corp., which upped its outlook and has seen its stock continue to rise.
The bulk of Emulex’s sales come from host bus adapters, a profitable bit of electronics that speed up the flow of data on a network.
“Our checks lead us to believe that Emulex’s host bus adapter business is weak at this time,” said Kaushik Roy, analyst at Pacific Growth Equities LLC in San Francisco.
Emulex has been losing market share to QLogic for host bus adapters for a while now. QLogic reached a 50% market share for the first time during the first quarter.
Emulex is likely selling fewer host bus adapters to companies that are hurting these days, such as banks and financial services companies, Roy said in a research note.
“Emulex’s host bus adapters have more exposure to the high-end and financial services than competitor QLogic,” he said.
For the June quarter, Emulex is looking for profits of $16 million to $17 million on sales of $111 million to $113 million
The revised outlook falls short of analysts’ expected $21 million in profits on sales of $121 million.
The company is set to report results on Aug. 7.
Despite Emulex’s sour news, the data storage industry is holding up pretty well, Roy said.
Strong spending on technology products in Europe, especially in Germany, and in Asia is keeping things afloat, he said.
Preparations for next month’s Summer Olympic Games in Beijing are driving some sales, but they might see a falloff after the event is over.
“The Olympics seems to have helped the technology infrastructure providers in the first and second quarters, but some people are worried that China is going to have a hangover in the third quarter,” Roy said.
True Games Adds
Santa Ana startup True Games Interactive, which licenses and markets online video games, nabbed another executive from Irvine-based competitor K2 Network Inc.
Peter Cesario, 33, is set to be True Games’ director of new business and product development,the same role he held at K2.
True Games Interactive founders Jeff Lujan and Bob Drobish also hail from K2 Network.
The venture, launched earlier this year, is set to be built around a business model called “free-to-play micro transactions.”
The game is free but players can purchase items, such as weapons, along the way.
True Games Interactive doesn’t do game development,it taps developers to come up with games or licenses them.
The model is the same as K2 Network’s and a handful other Asian video game developers.
In April, the company selected Las Vegas-based Petroglyph Games Inc. to develop its first title, due out later this year.
Cesario counts more than a decade in the industry, having done other production stints at Santa Clara-based Namco Bandai Games America Inc., France’s Vivendi SA and Australia’s News Corp.
He’s worked on a handful of games, including “Lord of the Rings,” “Snoopy vs. the Red Baron,” “Curious George,” “X-Files” and “Alien vs. Predator.”
At True Games, Cesario is set to oversee development initiatives and manage licensing relationships.
Liberty Sold
Liberty Information Management Systems, a small Costa Mesa-based maker of database software for businesses, was acquired last week by a Midwestern competitor.
Westlake, Ohio-based Hyland Software Inc. bought privately held Liberty for undisclosed terms.
Hyland competes with other local makers of what industry insiders call “enterprise content management” software, including Costa Mesa’s FileNet, a unit of IBM Corp., and Canada’s Open Text Corp., which has an office in Irvine.
The software helps capture and store documents related to a company’s business processes in a searchable database.
Hyland bought Liberty to gain a foothold on the West Coast and to better service its customers in the area, according to spokeswoman Kaitlin Maurer.
It has big customers in local government agencies including Orange County’s department of public works, the superintendent of schools and child support services.
Another customer is Brookfield Homes Southland Inc., which has an office in Costa Mesa and is part of New York-based Brookfield Properties Corp.
Liberty got its start in 1987 and has about 60 workers here. It’s set to keep its office and operate as a subsidiary.
Car Guy
Irvine-based online advertising startup Specific Media Inc. hired a former Ford Motor Co. executive to run its ad targeting network for automakers.
Jon Schulz is set to be vice president of global category development at Specific Media, which last year nabbed $100 million in private equity dollars to expand its business.
Most recently Schulz headed up all of the digital marketing for the Ford, Lincoln and Mercury auto brands, overseeing online ads, Web sites and relationship management with dealers.
In all he’s served a dozen years at the automaker in a variety of posts.
