Shares of Aliso Viejo-based QLogic Corp. fell 6% on Tuesday after a couple of downgrades from Wall Street analysts.
Some analysts are critical of the company’s $225 million sale of its hard disk drive controller chip business to Marvell Technology Group Ltd. The deal was announced on Monday.
Piper Jaffray Cos. analyst Les P. Santiago downgraded QLogic to “underperform” from “market perform,” saying the sale price undervalued the business.
Santiago valued the hard drive business at $450 million to $460 million, according to a report.
Robert W. Baird & Co. analyst Daniel J. Renuoard cut his rating to “neutral” from “outperform” and lowered his share price target by $4 to $36.
QLogic’s controller chip unit has been a drag on the company’s results in the past couple of quarters.
Some Wall Street investment banks, including Bear, Stearns & Co., already downgraded QLogic shares after the company’s most recent earnings report. The investment bank cited weakness in the company’s controller business in the downgrade.
Japan’s Hitatchi Ltd., one of QLogic’s two biggest buyers of controllers, has seen volatility, according to analysts.
The sale to Marvell allows QLogic to focus on electronic components for storage area networks, a business that’s seeing strong growth.
Shares of QLogic were trading at $33.6 on Tuesday.
