QLogic (QLGC) Holds Off Buybacks as Takeover Rumors Swirl

QLogic Corp (NASDAQ: QLGC) posted a solid quarter, but according to a source the reason for much of today's upside is that an offer for the company in the 'high-teens' has been tabled.

In early April, reports surfaced the company hired Qatalyst Partners to explore options and, as Stifel analyst Aaron Rakers pointed out, the company did not do any share repurchases in the quarter unlike previous quarters. On the call, the company blamed its foreign cash versus domestic cash for the lack of repurchases. At one point in the quarter, domestic cash dipped to $30 million, the CEO said.

Addressing the question of strategic review on the call, the acting CEO skirted around the issue, saying:

"So you talk about the strategic review, I think from time to time, just like every company, we do review our strategies and the plans with our Board of Directors to explore what is best to make QLogic more successful in the marketplace. And I think right now as a Management team we are very focused on our execution and we look at all the opportunities, either grow business organically or if we have a good acquisition opportunity so we certainly will pursue. So as a team we are very focused on execution and we always open for opportunities to create shareholder value."

With low domestic cash, buyers may smell blood in the water but a solid quarter will give management some negotiating power. Qatalyst has been known to get maximum dollar in deals they represent.

The company or Qatalyst did not respond to questions about the rumored offer.

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