Goldman Conference: Emulex Will Have to Wait for New Orders from EMC

LA QUINTA, Calif. -- The order delays behind Emulex's (EMLX Quote - Cramer on EMLX - Stock Picks) profit warning could extend another two months, according to comments made Monday at the Goldman Sachs Technology Investment Symposium by the head of one of the company's major customers.

In a conference call on Friday, Emulex said that it was seeing order deferrals from some of its large customers -- news that caused that stock to collapse on Monday, falling $37.13, or 48%, to $40.38.

"We probably contributed a little bit to that problem," said Mike Ruettgers, chairman of data-storage giant EMC (EMC Quote - Cramer on EMC - Stock Picks), which buys its fiber-channel products from Emulex. Ruettgers explained that additional Emulex systems bought by EMC last year had given it about six to eight weeks of Emulex inventory.

Until that inventory is drawn down, Emulex wouldn't see any more EMC orders. "In two months we'll see a pickup again, and buy new systems," said Ruettgers.

Separately, Ruettgers reaffirmed EMC's guidance for sales of $12 billion in 2001. "So far," he said, "we haven't seen any indication, as others have, that the business is falling off a cliff."

EMC fell $2.24, or 3.9%, to $54.16 Monday.