Shares of QLogic Corporation (QLGC) have fallen by over 1.02% during the mid morning trade on Friday. The stock has however recovered to 0.54% by noon for the reason that networking infrastructure solutions provider agreed to be bought by chip maker Cavium (CAVM) in a deal valued at $1.36 billion.
The deal will be funded with a combination of $220 million balance sheet cash, $750 million of committed financing, which includes $650 million of term loan and $100 million of short-term bridge debt, and $400 million in new Cavium equity. The transaction is expected to close in Q3 2016. Cavium’s stock price is down by over 2% by the end of the late morning trading session.
The stock had increased by over 10% by a market over reaction by this news, but however is falling down ever since. About 922,942 shares traded hands or 54.66% up from the average. QLogic Corporation has risen 6.87% since November 9, 2015 and is up trending. It has outperformed by 7.21% the S&P500.
“QLogic Corporation has announced design wins for its 25/50/100G Ethernet business, but those are not expected to contribute to revenues in a significant manner in the near term and that business is still small compared to its Fibre Channel business,” Barclays said in a note earlier today.
Statistics dictates the fact that QLGCnet income growth from the same quarter one year ago has significantly outpaced that of the S&P 500 and the Electronic Equipment, Instruments & Components industry.The net income increased by 63.6% when compared to the same quarter one year prior, rising from $11.15 million to $18.24 million.
The company has reported momentous earning per share advancement in the most recent quarter compare to the same quarter a year ago. It is progressing by a sound management over earnings and share float, as it has managed to generate stable earnings per share over the past year.
Nonetheless, the consensus estimates suggest that there will be a higher trend in the coming year.
During the past fiscal year, QLogic Corporation reported lower earnings of $0.56 versus $0.57 in the prior year. This year, the market expects an improvement in earnings ($1.06 versus $0.56). QLogic Corporation has under performed the S&P 500 Index, declining 10.07% from its price level of one year ago. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road.
QLogic Corporation and its subsidiaries design and supply high performance server and storage networking connectivity products that provide, enhance, and manage computer data communication. Its products facilitate the transfer of data and enable resource sharing between servers, networks, and storage.
The company offers advanced connectivity platforms comprising adapters and application-specific integrated circuits for server and storage connectivity applications; and legacy connectivity products consisting of fiber channel switch products. The company sells its products to original equipment manufacturers and distributors worldwide.