In our first quarter earnings press release issued earlier today, we reported both GAAP and non-GAAP results. A reconciliation of GAAP net income to non-GAAP net income and a summary of the non-GAAP adjustments are included in our earnings press release. All of the references we will make on the call today relate to non-GAAP results unless otherwise stated.Turning now to our financial results for the first fiscal quarter ended June 27, 2010. Our revenue in the first quarter was $142.6 million, an increase of 16% from the same quarter last year. This revenue was within our forecasted range of $140 to $146 million, provided during our fourth quarter earnings conference call. Our first quarter revenue from Host Products, which are comprised primarily of fibre channel adapters and converge network adapters was $102.5 million and increased 16% from $88.3 million recorded in the first quarter of last year. First quarter revenue from Network Products, which comprised primarily of fibre channel and InfiniBand switches was $25.6 million and increased 3% from $25 million recorded in the first quarter of last year. Our first quarter revenue from Silicon Products, comprised primarily of fibre channel and iSCSI protocol chips was $11.9 million, consistent with our expectations and increased 60% from $7.4 million recorded in the first quarter of last year. Silicon Products also include chips for embedded applications for converge networks. Our revenue from Royalty and Service was $2.6 million, and that consists almost entirely of service revenues. Our first quarter gross margin of 66.5% improved from 65.5% recorded in the first quarter of last year, primarily due to higher volume to absorb manufacturing costs. Our gross margin exceeded our forecast provided during the -- during our fourth quarter earnings conference call primarily due to product mix. Next, I’d like to cover our first quarter operating expenses. Total operating expenses were $54 million, up 4% from $52.2 million reported in the first quarter of last year. Operating expenses were slightly below our expectation.
Engineering expenses in the first quarter of $29.7 million increased 2% from a year ago and decreased as a percentage of revenue from 23.7% to 20.8%. We expect feature engineering expenses as a percentage of revenue to be in the range of 18% to 21%.Sales and marketing expenses in the first quarter of $18.3 million increased 8% from a year ago and decreased as a percentage of revenue from 13.9% to 12.8%. We expect that future sales and marketing expenses as a percentage of revenue will range from 11% to 14%. G&A expenses in the first quarter of $6 million or 4.2% of revenue. We expected future G&A expenses as a percentage of revenue will be approximately 4%. Operating profit in the first quarter of $40.8 million increased 44% from a year ago and increased as a percentage of revenue from 23% to 28.6%. Interest and other income was $1.4 million in the first quarter. Our income tax rate for the first quarter was 17.7%, which was slightly better than our expectation. Our first quarter net income of $34.7 million increased 45% from a year ago and represented a net profit margin of 24.3%. Our first quarter net income per diluted share of $0.30 was significantly better than the $0.20 we achieved last year and at the high-end of our forecasted range of $0.27 to $0.30 provided during our fourth quarter earnings conference call. This represents the 60th consecutive quarter of profitability for QLogic. Turning now to our balance sheet. The company’s cash and investment securities were $348.6 million at the end of the first quarter. We continue to maintain a strong cash position and have no debt. During the first quarter, we generated $30.6 million of cash from operations. Read the rest of this transcript for free on seekingalpha.com