Elliott Associates L.P. and its wholly-owned subsidiaries (collectively known as Elliott), an investment management firm headed by billionaire investor Paul Singer, disclosed 6.3% stake in Emulex Corporation (NYSE:ELX) based on its latest 13D filing with the Securities and Exchange Commission (SEC).
Based on the filing, Elliott directly owns 1,764,077 shares or 2.2%; Elliott International owns 3,275,923 shares or 4.1% stake as of May 9, 2014. Emulex Corporation (NYSE:ELX) provides network connectivity, monitoring and management as well as hardware and software solutions for global networks that support enterprise, cloud, government and telecommunications.
Quarterly financial results
Last month, Emulex Corporation (NYSE:ELX) reported a $0.09 net loss per share and $109.7 million revenues for its third quarter fiscal 2014. During the same period a year earlier, the company recorded $0.08 net loss per share and $116.8 million revenue.
During the period, the company said its revenues from its Network Connectivity Products (NCP) were $77.9 million and revenues from Network Visibility Products (NVP) were $7.1 million. Its revenues from Storage Connectivity and Other Products (SCOP) were $24.8 million.
Emulex Corporation (NYSE:ELX) ended its third quarter with $209.3 million cash, cash equivalents and investments. In a statement, its CEO Jeff Benck said, “Our team did a nice job of protecting profit in 3Q despite a softer demand environment among our OEMs and lack of predictability from NVP. We remain squarely focused on capturing the growth opportunity inherent to traffic visibility.”
In addition, Benck said, “Within connectivity, we are not immune to near-term disruptions associated with strategic developments at our major customers and we have taken steps to position us to better weather this period of transition in the market.”
Emulex’s Stock rating
Following its financial results, the shares of Emulex Corporation (NYSE:ELX) were downgraded by analysts at Piper Jaffray from Overweight to Neutral. The analysts also lowered their price target from $10 to $6 per share.
In a note to investors earlier this month, Piper Jaffray analyst Andrew J. Nowinski explained that the downgrade was due to a “lack of meaningful growth catalysts heading into FY15.” He also emphasized that the third quarter financial performance of Emulex Corporation (NYSE:ELX) was “uninspiring”, citing that its revenue was at the low-end of guidance while its earnings per share was at the mid-point.
“With demand waning and limited visibility into any near-term catalysts, we are moving to the sidelines, but would be more constructive when server and storage demand returns. Our Neutral rating reflects a $6 price target based on 11x our CY15 EPS estimate,” said Nowinski.
Over the past 52 weeks, the stock price of Emulex Corporation (NYSE:ELX) declined from $8.99 per share to $4.51 per share.
