Emulex Falls on Lower Profits

Despite profit drop, company beats estimates and issues upbeat forecast.
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SAN FRANCISCO -- Shares of

Emulex

(ELX)

fell after the maker of components for data storage networks reported a drop in quarterly profits.

In late trading, Emulex shares had recently fallen 28 cents, or 1.25%, to $22.04, after tacking on modest gains to its more than 4% increase during regular trading.

After the close of trading, Emulex said first-quarter net income fell to $10.2 million, or 12 cents a share, from $15 million, or 17 cents a share.

Excluding items, the company earned 27 cents a share, beating analysts' consensus view by 2 cents.

Revenue rose 14% to $117 million, toward the high end of the company's forecasted range and edging past analysts' average estimate. Sales of embedded storage products jumped 78%, accounting for 24% of total revenue, a gain of one percentage point from last year. Emulex's embedded products have been taking a greater share of business from

IBM

(IBM) - Get Report

at the expense of the company's chief rival,

QLogic

(QLGC)

.

The U.S. accounted for 42% of revenue, with Europe and the Pacific Rim countries roughly splitting the rest.

"Coming in at the high end of our guidance range is a good way to start off fiscal 2008," said Chief Executive Jim McCluney, in a statement.

For the second quarter, Emulex forecast earnings of 30 to 32 cents a share on revenue of $129 million to $133 million, above analysts' expectations of 29 cents a share and $127.5 million in revenue.