Feeds

Emulex 'hired Goldman Sachs to find themselves a buyer' - report

Company tight-lipped, 'insiders' spill beans

Combat fraud and increase customer satisfaction

SAN storage adaptor supplier Emulex has hired Goldman Sachs to find a buyer, according to Bloomberg.

Neither Emulex nor Goldman Sachs have confirmed the story, which Bloomberg says it heard from two people "with knowledge of the situation".

The rationale for such a sale is strong. The Fibre Channel HBA market, which Emulex and near-equal market share competitor QLogic dominate is a pretty low growth market as iSCSI access to block storage over Ethernet is preventing FC going down-market.

Faster Ethernet speeds are catching up with the current 8 and 16Gbit/s FC speed, and FCoE (Fibre Channel over Ethernet) is a potential successor or replacement for FC.

Ethernet gear supplier Broadcom mounted a hostile takeover for Emulex in 2009, offering $11.00/share, which Emulex rebuffed, assuring shareholders they would get more value if Emulex management ran the company than if Broadcom took over.

But Emulex's stock performance since then has fallen short of management's 2009 assurances. Instead of $600 million revenues in 2012 as Emulex predicted, revenues were $501.8 million. Such underperformance dragged prices down and they have continued going downhill since the failed Broadcom bid, trading for less than $8.00/share for over a year. Four things helped dampen the shares further:

  • Broadcom successfully sued Emulex for patent infringement and the company appeared to lack a strategy for growing again.
  • Emulex has made losses in eight of the past 12 quarters.
  • In 2012 activist investor Elliott Management built up a stake in Emulex and started pushing in 2013 for board representation and a sale of the company or its assets. Emulex decided to expand into Ethernet network performance analysis instead by buying Endace; a strategy Elliott opposed.
  • A second activist investor, Altai Capital, appeared on the scene, largely supporting Elliott's aims, and Emulex's management, led by CEO Jim McCluney was under assault again.

The Endace acquisition succeeded and it appeared Emulex was weathering the activist investor storm, but apparently not, if the Bloomberg report is to be believed. McCluney and the board must have decided Emulex's growth prospects are slight and its time to cut and run for the retirement hills, giving someone else a chance to take the reins of their stodgy company and whip it into action.

Emulex competitor QLogic is also in trouble, having changed its CEO and implemented restructuring plans to save costs.

Bloomberg mentions Broadcom and Brocade as potential Emulex buyers. ®

Combat fraud and increase customer satisfaction

More from The Register

next story
This time it's 'Personal': new Office 365 sub covers just two devices
Redmond also brings Office into Google's back yard
Kingston DataTraveler MicroDuo: Turn your phone into a 72GB beast
USB-usiness in the front, micro-USB party in the back
Dropbox defends fantastically badly timed Condoleezza Rice appointment
'Nothing is going to change with Dr. Rice's appointment,' file sharer promises
BOFH: Oh DO tell us what you think. *CLICK*
$%%&amp Oh dear, we've been cut *CLICK* Well hello *CLICK* You're breaking up...
AMD's 'Seattle' 64-bit ARM server chips now sampling, set to launch in late 2014
But they won't appear in SeaMicro Fabric Compute Systems anytime soon
Amazon reveals its Google-killing 'R3' server instances
A mega-memory instance that never forgets
Cisco reps flog Whiptail's Invicta arrays against EMC and Pure
Storage reseller report reveals who's selling what
Microsoft builds teleporter weapon to send VMware into Azure
Updated Virtual Machine Converter now converts Linux VMs too
prev story

Whitepapers

Securing web applications made simple and scalable
In this whitepaper learn how automated security testing can provide a simple and scalable way to protect your web applications.
3 Big data security analytics techniques
Applying these Big Data security analytics techniques can help you make your business safer by detecting attacks early, before significant damage is done.
The benefits of software based PBX
Why you should break free from your proprietary PBX and how to leverage your existing server hardware.
Top three mobile application threats
Learn about three of the top mobile application security threats facing businesses today and recommendations on how to mitigate the risk.
Combat fraud and increase customer satisfaction
Based on their experience using HP ArcSight Enterprise Security Manager for IT security operations, Finansbank moved to HP ArcSight ESM for fraud management.