QLogic Corp.’s recent sale of its hard-disk drive controller business has analysts and investors scratching their heads over the fallout.
After three days of up and down trading, the Aliso Viejo-based company’s stock price has settled back to where it was before the big announcement.
The volatility began Aug. 29 when QLogic announced it was selling off the controller unit to Silicon Valley’s Marvell Technology Group for $225 million. The unit had been a drag on QLogic’s results during the past couple of quarters.
The company said the sale would benefit shareholders by allowing QLogic to focus on making electronic components for storage area networks, a sector that’s growing quickly.
Japan’s Hitatchi Ltd., one of QLogic’s two biggest buyers of controllers, has seen volatility, according to analysts.
Initially, investors were pleased and pushed up the stock by about 2% to $35.60.
But on Aug. 30, a couple of analysts downgraded QLogic shares on the sale and the stock fell by about 6%.
Piper Jaffray analyst Les Santiago, who downgraded his rating on the stock to “underperform,” said the price tag for the business was at least 50% below what investors thought it was worth.
“Our belief is that investors were looking for an improvement in the (hard-drive controller) business as opposed to a sale at these prices,” Santiago wrote in a note.
Robert W. Baird analyst Dan Renouard downgraded the stock to “neutral,” though he said in a note that the sale is a good long-term move.
Then on Aug. 31, the company got an upgrade to “buy” from Citigroup’s Paul Mansky. He said the stock sell-off was overdone.
After having lowered sales expectations twice for QLogic in 2006, Mansky said the sale of the business improved the company’s growth rates and stock predictability. He also said concerns from other analysts were “backward looking.”
“Although operating margins will likely compress over the near-term, given the company’s anticipated growth profile, strong balance sheet, cash flow statement and attractive valuation, we recommend purchase of the shares,” Mansky said.
Investors were persuaded, but only to a point. The stock rose nearly 3% to $34.70 following the upgrade.
Party Like It’s 1999
Here’s a throwback to the late 1990s: A local technology company’s latest funding round was twice as much as it hoped for.
OK, we’re not talking huge bucks here, but Huntington Beach-based Voice Genesis Inc. recently said it inked a $1 million round of funding led by Los Angeles-based angel investors Keiretsu Forum.
The company, which initially sought $500,000 in funds, plans to use the money for product development.
The 4-year-old cell phone messaging company may be hitting on a promising market.
Earlier this year, Voice Genesis landed an agreement with the cell phone service provider Verizon Wireless of Bedminster, N.J., along with Alltel Corp. Inc. of Little Rock, Ark., said Mark Marriott, chief executive of the company. The company also has several regional cell provider customers.
Voice Genesis has a dozen employees at its headquarters. The company has developed a technology that lets users view incoming text messages on their cell phones, but send responses via a voice file that users record.
The voice messages go directly to e-mail accounts, but not as attachments, which could be blocked. They also can be retrieved on cell phones.
Marriott said it’s quicker for people to check messages by just looking at them on a mobile phone,not by listening to several messages.
On the other hand, it’s faster to speak responses than to type them in on a device with tiny buttons.
The service costs about $5 a month through Verizon Wireless.
Marriott didn’t reveal sales, but said he’s pursuing another venture funding round of $4 million to $5 million. The funds would help the company expand overseas.
Introducing
That picture to the left is no mistake. There’s been a changing of the guard for the Business Journal’s technology reporter position.
After four years at the helm, Andrew Simons is moving on to a national wire service, giving me the chance to take on one of Orange County’s most important economic drivers.
Although I’m still new to OC (I’ve been here about four months), I’m not new to the technology beat.
I’ve covered companies of all types and sizes in just about every industry, from chips and Web services to software and hardware.
Here’s an example: In my last assignment at the Dayton Business Journal in Ohio, I wrote heavily about NCR Corp., a Fortune 500 maker of automated teller machines and data-warehousing systems.
NCR is the company where Mark Hurd led a turnaround effort that resulted in a stock price tripling. Hurd now is chief executive at Hewlett-Packard Co.
Another highlight in my journalism career: covering Micron Technology Inc. of Boise, Idaho, one of the largest makers of memory chips.
Now that I’m in OC, I’ve been impressed by how diverse the technology community is here,and I’m looking forward to learning more.
