Updated from 5:02 p.m. EDT

Storage-networking outfit Emulex ( ELX) met Street estimates, but unsettled some analysts by issuing a range of guidance that fell below current expectations.

In after-hours trading, the stock dropped $2.76, of 12%, to $20.85. Earlier, it had closed up $1.26, or 5.6%, to $23.61.

Today, the company said its fiscal fourth quarter revenues were $70.2 million, up 20% from a year ago and 1% sequentially. It recorded pro forma earnings of 16 cents.

On a GAAP basis, Emulex posted a loss of $11.4 million, or 14 cents per share, an improvement from last year's loss of 38 cents per share.

The loss reflects special charges of $39 million related to the acquisition of Giganet, a storage-networking company.

But though it met expectations for the most recent quarter, the company gave guidance for the current quarter that fell below current Street estimates. Analysts had been forecasting revenues of just under $75 million for the first quarter of fiscal 2003, according to Thomson Financial/First Call. But today, Emulex said it's expecting sales of $68 to $73 million.

In response to a question about weak demand, CEO Paul Folino said he believed the worst is over, and that the industry had bottomed in the September quarter of 2001.

"Sequentially we've seen growth from there through the last three quarters, though it was very modest in the last quarter," Folino said. "The view is things are getting much more stable, but I think everybody's still very cautious."

He referred to research from Gartner Dataquest that forecast the market for fiber channel host bus adapters (HBAs) will grow at a compound annual growth rate of 34% between 2001 and 2006. "Year over year, the fiber channel side of the equation grew 20%," he said. "If it can grow 20% in the most challenging economic environment in years, then 34% over the next four or five years seems reasonable."

Though plenty of Silicon Valley companies have had to lay off staff, Emulex said it had hired 13 people in the most recent quarter, and that "modest" hiring would continue as it increases the ranks of engineers.

Folino said Emulex expects revenues for fiscal year 2003 of $305 million to $325 million, with pro forma earnings in the range of 70 to 75 cents.

At the close of its 2002 fiscal year, Emulex reported a net loss of $96.2 million under generally accepted accounting principles, or $1.18 per share, compared with a much smaller loss of $23.6 million in fiscal year 2001.

It posted annual revenues growth of 4%, to $255 million.

The company said it will adopt FASB rule 142 in the first quarter of fiscal 2003. Following the change, goodwill associated with the Giganet acquisition will no longer be routinely amortized on a quarterly basis. Future quarterly GAAP charges associated with amortization of deferred compensation and other intangibles are expected to amount to approximately $2.3 million.