10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended January 1, 2012

Commission file number 0-23298

QLogic Corporation

(Exact name of registrant as specified in its charter)

Delaware	33-0537669
(State of incorporation)	(I.R.S. Employer
	Identification No.)

26650 Aliso Viejo Parkway

Aliso Viejo, California 92656

(Address of principal executive office and zip code)

(949) 389-6000

(Registrant’s telephone number, including area code)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	x	Accelerated filer	¨		Non-accelerated filer	¨	Smaller reporting company	¨
				(Do not check if a smaller reporting company)

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No   x

As of January 27, 2012, 98,669,000 shares of the Registrant’s common stock were outstanding.

QLOGIC CORPORATION

INDEX

		Page
	PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements:
	Condensed Consolidated Balance Sheets as of January 1, 2012 and April 3, 2011		1
	Condensed Consolidated Statements of Income for the three and nine months ended January 1, 2012 and December 26, 2010		2
	Condensed Consolidated Statements of Cash Flows for the nine months ended January 1, 2012 and December 26, 2010		3
	Notes to Condensed Consolidated Financial Statements		4
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		9
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		19
Item 4.	Controls and Procedures		19
	PART II. OTHER INFORMATION
Item 1A.	Risk Factors		20
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		31
Item 6.	Exhibits		32
	Signatures		33

i

PART I.

FINANCIAL INFORMATION

Item 1. Financial Statements

QLOGIC CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

	January 1, 2012			April 3, 2011
	(Unaudited; In thousands, except share and per share amounts)
ASSETS
Current assets:
Cash and cash equivalents	$	74,198		$	147,780
Marketable securities		321,627			236,296
Accounts receivable, less allowance for doubtful accounts of $1,530 and $1,536 as of January 1, 2012 and April 3, 2011, respectively		82,221			70,134
Inventories		26,967			26,931
Deferred tax assets		19,954			17,754
Other current assets		13,390			20,753
Total current assets		538,357			519,648
Property and equipment, net		78,715			77,134
Goodwill		119,748			119,748
Purchased intangible assets, net		10,179			12,694
Deferred tax assets		27,284			25,333
Other assets		2,082			2,650
	$	776,365		$	757,207
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	35,099		$	34,816
Accrued compensation		28,240			25,858
Accrued taxes		3,029			6,012
Deferred revenue		10,348			10,431
Other current liabilities		6,356			5,221
Total current liabilities		83,072			82,338
Accrued taxes		62,409			62,565
Deferred revenue		3,840			5,169
Other liabilities		5,922			5,971
Total liabilities		155,243			156,043
Stockholders’ equity:
Preferred stock, $0.001 par value; 1,000,000 shares authorized; no shares issued and outstanding		—			—
Common stock, $0.001 par value; 500,000,000 shares authorized; 209,459,000 and 208,042,000 shares issued as of January 1, 2012 and April 3, 2011, respectively		209			208
Additional paid-in capital		877,763			844,546
Retained earnings		1,478,870			1,387,765
Accumulated other comprehensive income		299			614
Treasury stock, at cost: 110,498,000 and 103,325,000 shares as of January 1, 2012 and April 3, 2011, respectively		(1,736,019	)		(1,631,969	)
Total stockholders’ equity		621,122			601,164
	$	776,365		$	757,207

See accompanying notes to condensed consolidated financial statements.

1

QLOGIC CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

		$000,000,0,00		$000,000,0,00			$000,000,0,00		$000,000,0,00
	Three Months Ended					Nine Months Ended
	January 1, 2012		December 26, 2010			January 1, 2012		December 26, 2010
	(Unaudited; In thousands, except per share amounts)
Net revenues	$	152,661	$	155,771		$	454,463	$	444,909
Cost of revenues		52,055		53,000			154,010		153,112
Gross profit		100,606		102,771			300,453		291,797
Operating expenses:
Engineering and development		36,883		33,148			112,446		100,649
Sales and marketing		21,514		20,103			63,219		60,953
General and administrative		8,803		9,061			26,820		25,560
Special charges		—		—			—		931
Total operating expenses		67,200		62,312			202,485		188,093
Operating income		33,406		40,459			97,968		103,704
Interest and other income, net		798		773			2,926		4,258
Income before income taxes		34,204		41,232			100,894		107,962
Income taxes		4,179		(9,107	)		9,789		2,188
Net income	$	30,025	$	50,339		$	91,105	$	105,774
Net income per share:
Basic	$	0.30	$	0.48		$	0.89	$	0.97
Diluted	$	0.30	$	0.47		$	0.88	$	0.96
Number of shares used in per share calculations:
Basic		100,135		105,830			102,696		108,492
Diluted		100,668		107,327			103,340		110,032

See accompanying notes to condensed consolidated financial statements.

2

QLOGIC CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

	Nine Months Ended
	January 1, 2012			December 26, 2010
	(Unaudited; In thousands)
Cash flows from operating activities:
Net income	$	91,105		$	105,774
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		21,047			22,612
Stock-based compensation		25,787			27,111
Amortization of acquisition-related intangible assets		3,467			3,467
Deferred income taxes		(4,334	)		6,810
Net gains on investment securities		(729	)		(2,021	)
Other non-cash items		5,811			1,435
Changes in operating assets and liabilities:
Accounts receivable		(12,244	)		(10,769	)
Inventories		(36	)		(6,454	)
Other assets		119			841
Accounts payable		(2,333	)		(6,232	)
Accrued compensation		2,382			405
Accrued taxes		4,531			(21,068	)
Deferred revenue		(1,412	)		(685	)
Other liabilities		936			(3,968	)
Net cash provided by operating activities		134,097			117,258
Cash flows from investing activities:
Purchases of available-for-sale securities		(336,005	)		(221,884	)
Proceeds from sales and maturities of available-for-sale securities		247,928			146,840
Proceeds from disposition of trading securities		—			23,800
Distributions from other investment securities		—			329
Purchases of property and equipment		(23,480	)		(17,881	)
Net cash used in investing activities		(111,557	)		(68,796	)
Cash flows from financing activities:
Proceeds from issuance of common stock under stock-based awards		12,674			29,637
Excess tax benefits from stock-based awards		529			1,610
Minimum tax withholding paid on behalf of employees for restricted stock units		(5,425	)		(6,739	)
Purchases of treasury stock		(103,900	)		(156,986	)
Net cash used in financing activities		(96,122	)		(132,478	)
Net decrease in cash and cash equivalents		(73,582	)		(84,016	)
Cash and cash equivalents at beginning of period		147,780			190,308
Cash and cash equivalents at end of period	$	74,198		$	106,292

See accompanying notes to condensed consolidated financial statements.

3

QLOGIC CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Basis of Presentation

In the opinion of management of QLogic Corporation (QLogic or the Company), the accompanying unaudited condensed consolidated financial statements contain all normal recurring accruals and adjustments necessary to present fairly the Company’s consolidated financial position, results of operations and cash flows. The accompanying condensed consolidated financial statements should be read in conjunction with the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended April 3, 2011. The results of operations for the three and nine months ended January 1, 2012 are not necessarily indicative of the results that may be expected for the entire fiscal year. The preparation of financial statements in accordance with U.S. generally accepted accounting principles requires management to make estimates that affect the amounts reported in the Company’s consolidated financial statements and accompanying notes. The Company evaluates its estimates on an ongoing basis using historical experience and other factors, including the current economic environment. Among the significant estimates affecting the consolidated financial statements are those related to revenue recognition, stock-based compensation, income taxes, investment securities, inventories, goodwill and long-lived assets. The actual results experienced by the Company could differ materially from management’s estimates.

Recently Adopted Accounting Standards

In September 2009, the Financial Accounting Standards Board reached a consensus on Accounting Standards Update (ASU) 2009-13, “Revenue Recognition (Topic 605) — Multiple-Deliverable Revenue Arrangements” and ASU 2009-14, “Software (Topic 985) — Certain Revenue Arrangements That Include Software Elements.” ASU 2009-13 modifies the requirements that must be met for an entity to recognize revenue from the sale of a delivered item that is part of a multiple-element arrangement when other items have not yet been delivered. ASU 2009-13 establishes a selling price hierarchy that allows for the use of an estimated selling price to determine the allocation of arrangement consideration to a deliverable in a multiple-element arrangement where neither vendor-specific objective evidence nor third-party evidence is available for that deliverable. Overall arrangement consideration is allocated at the inception of the arrangement to all deliverables based on their relative selling prices. The residual method of allocating arrangement consideration has been eliminated. ASU 2009-14 modifies the software revenue recognition guidance to exclude from its scope tangible products that contain both software and non-software components that function together to deliver a product’s essential functionality. The Company adopted the provisions of these standards beginning in the first quarter of fiscal 2012 on a prospective basis. The adoption of these standards did not have a material impact on the Company’s condensed consolidated financial statements.

Note 2. Marketable Securities

The Company’s portfolio of available-for-sale marketable securities consists of the following:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
	(In thousands)
January 1, 2012
U.S. government and agency securities	$	121,512	$	233	$	(27	)	$	121,718
Corporate debt obligations		144,650		750		(531	)		144,869
Asset and mortgage-backed securities		38,895		218		(73	)		39,040
Municipal bonds		15,788		22		(2	)		15,808
Total debt securities		320,845		1,223		(633	)		321,435
Certificates of deposit		192		—		—			192
	$	321,037	$	1,223	$	(633	)	$	321,627
April 3, 2011
U.S. government and agency securities	$	55,875	$	94	$	(216	)	$	55,753
Corporate debt obligations		137,706		1,012		(282	)		138,436
Asset and mortgage-backed securities		22,249		293		(52	)		22,490
Municipal bonds		17,941		10		(10	)		17,941
Non-U.S. government and agency securities		1,676		—		—			1,676
	$	235,447	$	1,409	$	(560	)	$	236,296

4

QLOGIC CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The amortized cost and estimated fair value of debt securities as of January 1, 2012, by contractual maturity, are presented below. Expected maturities will differ from contractual maturities because the issuers of securities may have the right to repay obligations without prepayment penalties. Certain debt instruments, although possessing a contractual maturity greater than one year, are classified as short-term marketable securities based on their ability to be traded on active markets and availability for current operations.

	Amortized Cost		Estimated Fair Value
	(In thousands)
Due in one year or less	$	108,574	$	108,884
Due after one year through three years		147,688		147,830
Due after three years through five years		20,977		20,972
Due after five years		43,606		43,749
	$	320,845	$	321,435

The following table presents the Company’s marketable securities with unrealized losses by investment category and length of time that individual securities have been in a continuous unrealized loss position as of January 1, 2012 and April 3, 2011.

	Less Than 12 Months					12 Months or Greater					Total
Description of Securities	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
	(In thousands)
January 1, 2012
U.S. government and agency securities	$	48,183	$	(27	)	$	—	$	—		$	48,183	$	(27	)
Corporate debt obligations		65,975		(529	)		327		(2	)		66,302		(531	)
Asset and mortgage-backed securities		14,935		(73	)		—		—			14,935		(73	)
Municipal bonds		2,073		(2	)		—		—			2,073		(2	)
	$	131,166	$	(631	)	$	327	$	(2	)	$	131,493	$	(633	)
April 3, 2011
U.S. government and agency securities	$	25,712	$	(216	)	$	—	$	—		$	25,712	$	(216	)
Corporate debt obligations		60,595		(282	)		—		—			60,595		(282	)
Asset and mortgage-backed securities		7,991		(52	)		—		—			7,991		(52	)
Municipal bonds		1,866		(10	)		—		—			1,866		(10	)
	$	96,164	$	(560	)	$	—	$	—		$	96,164	$	(560	)

As of January 1, 2012 and April 3, 2011, the fair value of certain of the Company’s available-for-sale securities was less than their cost basis. Management reviewed various factors in determining whether to recognize an impairment charge related to these unrealized losses, including the current financial and credit market environment, the financial condition and near-term prospects of the issuer of the investment security, the magnitude of the unrealized loss compared to the cost of the investment, the length of time the investment had been in a loss position and the Company’s intent and ability to hold the investment for a period of time sufficient to allow for any anticipated recovery of market value. As of January 1, 2012 and April 3, 2011, the Company determined that the unrealized losses were temporary in nature and recorded them as a component of accumulated other comprehensive income.

Note 3. Fair Value Measurements

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The fair value hierarchy is based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value. A description of the three levels of inputs is as follows:

• Level 1 – Quoted prices in active markets for identical assets or liabilities.

• Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

• Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

5

QLOGIC CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Assets measured at fair value on a recurring basis as of January 1, 2012 and April 3, 2011 are as follows:

	Fair Value Measurements Using
	Level 1		Level 2		Level 3		Total
January 1, 2012	(In thousands)
Cash and cash equivalents	$	70,189	$	4,009	$	—	$	74,198
Marketable securities:
U.S. government and agency securities		121,718		—		—		121,718
Corporate debt obligations		—		144,869		—		144,869
Asset and mortgage-backed securities		—		39,040		—		39,040
Municipal bonds		—		15,808		—		15,808
Certificates of deposit		192		—		—		192
		121,910		199,717		—		321,627
	$	192,099	$	203,726	$	—	$	395,825
April 3, 2011
Cash and cash equivalents	$	146,281	$	1,499	$	—	$	147,780
Marketable securities:
U.S. government and agency securities		55,753		—		—		55,753
Corporate debt obligations		—		138,436		—		138,436
Asset and mortgage-backed securities		—		22,490		—		22,490
Municipal bonds		—		17,941		—		17,941
Non-U.S. government and agency securities		—		1,676		—		1,676
		55,753		180,543		—		236,296
	$	202,034	$	182,042	$	—	$	384,076

The Company’s investments classified within Level 2 were primarily valued based on valuations obtained from a third-party pricing service. To estimate fair value, the pricing service utilizes industry standard valuation models, including both income and market-based approaches for which all significant inputs are observable either directly or indirectly. These inputs include reported trades and broker/dealer quotes of the same or similar securities, issuer credit spreads, benchmark securities and other observable inputs.

Note 4. Inventories

Components of inventories are as follows:

	January 1, 2012		April 3, 2011
	(In thousands)
Raw materials	$	6,669	$	5,702
Finished goods		20,298		21,229
	$	26,967	$	26,931

Note 5. Treasury Stock

In November 2011, the Board of Directors approved a program to repurchase up to an additional $200 million of the Company’s outstanding common stock over a two-year period commencing upon the conclusion of the existing program approved in August 2010. Since fiscal 2003, the Company has had various stock repurchase programs that authorized the purchase of up to $1.95 billion of its outstanding common stock.

Repurchased shares have been recorded as treasury shares and will be held until the Company’s Board of Directors designates that these shares be retired or used for other purposes.

6

QLOGIC CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 6. Stock-Based Compensation

During the nine months ended January 1, 2012, the Company granted options to purchase 1.6 million shares of common stock and 1.6 million restricted stock units with weighted average grant date fair values of $5.73 and $15.55 per share, respectively, and also granted 0.2 million restricted stock units with performance conditions to certain senior executives.

A summary of stock-based compensation expense, by functional line item in the condensed consolidated statements of income, is as follows:

	Three Months Ended				Nine Months Ended
	January 1, 2012		December 26, 2010		January 1, 2012		December 26, 2010
	(In thousands)
Cost of revenues	$	632	$	599	$	2,075	$	1,962
Engineering and development		3,553		3,714		11,776		12,692
Sales and marketing		1,924		1,824		5,625		5,866
General and administrative		1,991		2,382		6,311		6,591
	$	8,100	$	8,519	$	25,787	$	27,111

Note 7. Income Taxes

The Company’s provision (benefit) for income taxes was $4.2 million and $9.8 million for the three and nine months ended January 1, 2012, respectively, and $(9.1) million and $2.2 million for the three and nine months ended December 26, 2010, respectively.

The effective tax rate was 10% and 2% for the nine months ended January 1, 2012 and December 26, 2010, respectively. The effective tax rate is based upon the estimated income for the year, the composition of the estimated income in different tax jurisdictions, and the tax effect, if any, in the applicable quarterly periods of newly enacted tax legislation, resolution of tax audits, changes in uncertain tax positions, and other discrete tax related items. The allocation of taxable income to domestic and foreign tax jurisdictions impacts the effective tax rate, as the Company’s income tax rate in foreign jurisdictions is generally lower than its income tax rate in the United States.

The effective tax rate for the nine months ended January 1, 2012 was favorably impacted by certain discrete tax related items, principally the resolution of state income tax examinations. The effective tax rate for the nine months ended December 26, 2010 was favorably impacted by $14.6 million of income tax benefits related to the expiration of certain statutes of limitation, the retroactive reinstatement of the federal research tax credit and certain other items that were recorded in the three months ended December 26, 2010.

The Company’s federal consolidated income tax returns for fiscal years 2008 and 2009 are currently under examination by the Internal Revenue Service. Management does not believe that the results of these examinations will have a material impact on the Company’s financial condition or results of operations.

Note 8. Net Income Per Share

The following table sets forth the computation of basic and diluted net income per share:

	Three Months Ended				Nine Months Ended
	January 1, 2012		December 26, 2010		January 1, 2012		December 26, 2010
	(In thousands, except per share amounts)
Net income	$	30,025	$	50,339	$	91,105	$	105,774
Shares:
Weighted-average shares outstanding — basic		100,135		105,830		102,696		108,492
Dilutive potential common shares, using treasury stock method		533		1,497		644		1,540
Weighted-average shares outstanding — diluted		100,668		107,327		103,340		110,032
Net income per share:
Basic	$	0.30	$	0.48	$	0.89	$	0.97
Diluted	$	0.30	$	0.47	$	0.88	$	0.96

7

QLOGIC CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Stock-based awards, including stock options and restricted stock units, representing 19.2 million and 18.2 million shares of common stock have been excluded from the diluted net income per share calculations for the three and nine months ended January 1, 2012, respectively, and 13.3 million and 15.1 million shares of common stock have been excluded from the diluted net income per share calculations for the three and nine months ended December 26, 2010, respectively. These stock-based awards have been excluded from the diluted net income per share calculations because their effect would have been antidilutive.

Note 9. Comprehensive Income

Components of comprehensive income are as follows:

	Three Months Ended					Nine Months Ended
	January 1, 2012		December 26, 2010			January 1, 2012			December 26, 2010
	(In thousands)
Net income	$	30,025	$	50,339		$	91,105		$	105,774
Other comprehensive income:
Change in unrealized gains/losses on marketable securities, net of income taxes		218		(835	)		(315	)		(758	)
	$	30,243	$	49,504		$	90,790		$	105,016

Note 10. Subsequent Event

On January 20, 2012, the Company entered into a definitive agreement to sell the product lines and certain assets associated with its InfiniBand business to Intel Corporation for $125 million in cash, subject to downward adjustment based on inventory at closing. The assets to be sold are comprised primarily of technology, property and equipment, and inventories related to the InfiniBand business. The carrying value of the net assets associated with the InfiniBand business, including an allocation of the Company’s goodwill, is not material to the Company’s condensed consolidated balance sheet as of January 1, 2012. The transaction, which is subject to regulatory approvals and other customary closing conditions, is expected to close in the fourth quarter of fiscal 2012.

8

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with our unaudited condensed consolidated financial statements and related notes. In this discussion and elsewhere in this report, we make forward-looking statements. These forward-looking statements are made in reliance upon safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements include, without limitation, descriptions of our expectations regarding future trends affecting our business and other statements regarding future events or our objectives, goals, strategies, beliefs and underlying assumptions that are other than statements of historical fact. When used in this report, the words “anticipates,” “believes,” “can,” “continue,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “should,” “will” and similar expressions, or the negative of such expressions, are intended to identify these forward-looking statements. Statements concerning current conditions may also be forward-looking if they imply a continuation of current conditions. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of several factors, including, but not limited to those factors set forth and discussed in Part II, Item 1A “Risk Factors” and elsewhere in this report. In light of the significant uncertainties inherent in the forward-looking information included in this report, the inclusion of this information should not be regarded as a representation by us or any other person that our objectives or plans will be achieved. You are cautioned, therefore, not to place undue reliance on these forward-looking statements, which are made only as of the date of this report. We undertake no obligation to update or revise these forward-looking statements, whether as a result of new information, future events or otherwise.

Overview

We design and supply high performance network infrastructure connectivity products that provide, enhance and manage computer data communication. These products facilitate the rapid transfer of data and enable efficient resource sharing between servers and storage devices. Our products are used in enterprise data centers, cloud computing and other environments dependent on high performance, reliable networking.

Our products are used in connection with three distinct types of networks: Storage Networks, High Performance Computing, or HPC, Networks, and Converged Networks. Storage Networks are used to provide critical data across enterprise environments and primarily use Fibre Channel technology. HPC Networks facilitate advanced parallel processing over multiple servers and typically are used for applications where very large amounts of data must be processed quickly and efficiently. The HPC Network products that we sell are based on InfiniBand^® technology. Converged Networks are designed to address the evolving data center by consolidating and unifying various classes of connectivity and networks, such as storage area networks and local area networks, using Ethernet speeds of 10Gb and greater. For example, Fibre Channel over Ethernet, or FCoE, uses an enhanced Ethernet network for both Fibre Channel storage and Ethernet data transmission, thus combining the benefits of Fibre Channel technology with the pervasiveness of Ethernet networks used by most local area networks.

We classify our products into three broad categories: Host Products, Network Products and Silicon Products. Host Products consist of Fibre Channel and Internet Small Computer Systems Interface, or iSCSI, host bus adapters; InfiniBand host channel adapters; and converged network adapters, which consist of adapters based on 10Gb Ethernet connectivity. Network Products consist of Fibre Channel switches, including stackable edge switches, bladed switches, virtualized pass-through modules, and high-port count modular-chassis switches; InfiniBand switches, including high-end multi-protocol directors, edge and bladed switches; Enhanced Ethernet pass-through modules; and storage routers for bridging Fibre Channel, FCoE and iSCSI networks, and migrating data between storage devices. Silicon Products consist of Fibre Channel controllers, iSCSI controllers, converged network controllers and Ethernet controllers.

Our products are sold worldwide, primarily to original equipment manufacturers, or OEMs, and distributors. Our customers rely on our various networking infrastructure products to deliver solutions to information technology professionals in virtually every business sector. Our products are found primarily in server, workstation, network and storage subsystem solutions that are used by small, medium and large enterprises with critical business data requirements. These products are incorporated in solutions from a number of storage system and computer system OEM customers, including Cisco Systems, Inc., Dell Inc., EMC Corporation, Hewlett-Packard Company, International Business Machines Corporation, NetApp, Inc., Oracle Corporation and many others.

Sale of InfiniBand Business

On January 20, 2012, we entered into a definitive agreement to sell the product lines and certain assets associated with our InfiniBand business to Intel Corporation for $125 million in cash, subject to downward adjustment based on inventory at closing. The transaction, which is subject to regulatory approvals and other customary closing conditions, is expected to close in the fourth quarter of fiscal 2012.

Revenues from our InfiniBand business for the nine months ended January 1, 2012 and December 26, 2010 were approximately 7 percent of total revenues. In connection with this transaction, we expect the future presentation of our results of operations to exclude the InfiniBand business. Except for the anticipated gain on sale of assets, we do not expect the completion of this transaction to have a material impact on our future results of operations. Management is currently evaluating the tax impact that this transaction will have on our results of operations and financial condition.

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Third Quarter Financial Highlights and Other Information

A summary of our financial performance during the third quarter of fiscal 2012 is as follows:

• Net revenues of $152.7 million for the third quarter of fiscal 2012 increased from $150.2 million in the second quarter of fiscal 2012. Revenues from Host Products were $112.7 million for the third quarter of fiscal 2012 and increased sequentially by $7.1 million, or 7%, from the second quarter of fiscal 2012. Revenues from Network Products were $24.4 million for the third quarter of fiscal 2012 compared to $27.8 million in the second quarter of fiscal 2012. Revenues from Silicon Products were $12.5 million for the third quarter of fiscal 2012 compared to $13.9 million in the second quarter of fiscal 2012.

• Gross profit as a percentage of net revenues was 65.9% for the third quarter of fiscal 2012 compared to 66.0% in the second quarter of fiscal 2012.

• Operating income as a percentage of net revenues for the third quarter of fiscal 2012 increased to 21.9% from 21.3% in the second quarter of fiscal 2012.

• Net income of $30.0 million, or $0.30 per diluted share, in the third quarter of fiscal 2012 increased sequentially from $28.7 million, or $0.28 per diluted share, in the second quarter of fiscal 2012.

• Cash, cash equivalents and marketable securities increased to $395.8 million as of January 1, 2012 from $390.9 million as of October 2, 2011.

• Accounts receivable decreased to $82.2 million as of January 1, 2012 from $86.5 million as of October 2, 2011. Days sales outstanding (DSO) in receivables decreased to 49 days as of January 1, 2012 from 52 days as of October 2, 2011.

• Inventories were $27.0 million as of January 1, 2012 compared to $23.5 million as of October 2, 2011. Our annualized inventory turns were 7.7 turns in the third quarter of fiscal 2012 compared to 8.7 turns in the second quarter of fiscal 2012.

Results of Operations

Net Revenues

A summary of our net revenues by product category is as follows:

	Three Months Ended						Nine Months Ended
	January 1, 2012			December 26, 2010			January 1, 2012			December 26, 2010
	(Dollars in millions)
Net revenues:
Host Products	$	112.7		$	113.5		$	328.1		$	320.1
Network Products		24.4			28.9			74.1			81.8
Silicon Products		12.5			10.7			43.1			34.9
Service and other		3.1			2.7			9.2			8.1
	$	152.7		$	155.8		$	454.5		$	444.9
Percentage of net revenues:
Host Products		74	%		73	%		72	%		72	%
Network Products		16			18			16			18
Silicon Products		8			7			10			8
Service and other		2			2			2			2
		100	%		100	%		100	%		100	%

Historically, the global marketplace for network infrastructure solutions has expanded in response to the information requirements of enterprise data centers, cloud computing and other environments dependent on high performance, reliable networking. The markets we serve have been characterized by rapid advances in technology and related product performance, which has generally resulted in declining average selling prices over time. In general, our revenues have been favorably affected by increases in units sold as a result of market expansion and the release of new products. The favorable effect on our revenues as a result of increases in volume has been partially offset by the impact of declining average selling prices on a like-for-like product comparison basis.

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The United States and other countries around the world have experienced, and are continuing to experience, economic weakness and uncertainty. Economic uncertainty has adversely affected, and in the future may adversely affect, information technology spending rates. Accordingly, it is extremely difficult for us to forecast future sales levels and historical information may not be indicative of future trends.

Our net revenues are derived primarily from the sale of Host Products, Network Products and Silicon Products. Net revenues decreased 2% to $152.7 million for the three months ended January 1, 2012 from $155.8 million for the three months ended December 26, 2010. The decrease in net revenue was primarily the result of a $4.5 million, or 16%, decrease in revenue from Network Products, partially offset by a $1.8 million, or 17%, increase in revenue from Silicon Products. The decrease in revenue from Network Products was primarily due to a 31% decrease in the quantity of switches sold, partially offset by a 16% increase in the average selling price of these switches due to a favorable change in product mix. The increase in revenue from Silicon Products was primarily due to an increase in the average selling price of the chips sold. Net revenues for the three months ended January 1, 2012 included $3.1 million of service and other revenues compared with $2.7 million of service and other revenues for the three months ended December 26, 2010. We do not expect service and other revenues to be significant to our overall revenues.

Net revenues increased 2% to $454.5 million for the nine months ended January 1, 2012 from $444.9 million for the nine months ended December 26, 2010. The increase was primarily the result of an $8.0 million, or 2%, increase in revenue from Host Products and an $8.2 million, or 23%, increase in revenue from Silicon Products, partially offset by a $7.7 million, or 9%, decrease in revenue from Network Products. The increase in revenue from Host Products was primarily due to an increase in the average selling price of the adapters sold. The increase in revenue from Silicon Products was due to a 16% increase in the average selling price of the chips sold and a 6% increase in the quantity sold. The decrease in revenue from Network Products was primarily due to a 20% decrease in the quantity of switches sold, partially offset by an 8% increase in the average selling price of these switches due to a favorable change in product mix.

A small number of our customers account for a substantial portion of our net revenues, and we expect that a small number of customers will continue to represent a substantial portion of our net revenues for the foreseeable future. Our top ten customers accounted for 85% and 84% of net revenues during the nine months ended January 1, 2012 and December 26, 2010, respectively.

We believe our major customers continually evaluate whether or not to purchase products from alternative or additional sources. Accordingly, there can be no assurance that a major customer will not reduce, delay or eliminate its purchases from us. Any such reduction, delay or loss of purchases could have a material adverse effect on our business, financial condition or results of operations.

Net revenues by geographic area are as follows:

	Three Months Ended				Nine Months Ended
	January 1, 2012		December 26, 2010		January 1, 2012		December 26, 2010
	(In millions)
United States	$	66.0	$	65.7	$	203.6	$	198.2
Asia-Pacific and Japan		47.9		43.4		140.0		120.8
Europe, Middle East and Africa		31.5		36.3		89.2		99.6
Rest of world		7.3		10.4		21.7		26.3
	$	152.7	$	155.8	$	454.5	$	444.9

Revenues by geographic area are presented based upon the ship-to location of the customer, which is not necessarily indicative of the location of the ultimate end-user of our products. No individual country other than the United States and China represented 10% or more of net revenues for the periods presented. Net revenues from customers in China were $20.2 million and $57.8 million for the three and nine months ended January 1, 2012, respectively, and $23.9 million and $64.1 million for the three and nine months ended December 26, 2010, respectively.

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Gross Profit

Gross profit represents net revenues less cost of revenues. Cost of revenues consists primarily of the cost of purchased products, assembly and test services; costs associated with product procurement, inventory management, logistics and product quality; and the amortization of purchased intangible assets. A summary of our gross profit and related percentage of net revenues is as follows:

	Three Months Ended						Nine Months Ended
	January 1, 2012			December 26, 2010			January 1, 2012			December 26, 2010
	(Dollars in millions)
Gross profit	$	100.6		$	102.8		$	300.5		$	291.8
Percentage of net revenues		65.9	%		66.0	%		66.1	%		65.6	%

Gross profit for the three months ended January 1, 2012 decreased $2.2 million, or 2%, from gross profit for the three months ended December 26, 2010. The gross profit percentage for the three months ended January 1, 2012 was 65.9% and declined slightly from 66.0% for the corresponding quarter in the prior year.

Gross profit for the nine months ended January 1, 2012 increased $8.7 million, or 3%, from gross profit for the nine months ended December 26, 2010. The gross profit percentage for the nine months ended January 1, 2012 was 66.1% and increased from 65.6% for the corresponding period in the prior year, primarily due to a favorable change in product mix.

Our ability to maintain our current gross profit percentage may be significantly affected by factors such as manufacturing volumes over which fixed costs are absorbed, sales discounts and customer incentives, component costs, the mix of products shipped, the transition to new products, competitive price pressures, the timeliness of volume shipments of new products, our ability to achieve manufacturing cost reductions, and amortization and impairments of purchased intangible assets. We anticipate that it will continue to be difficult to reduce manufacturing costs. As a result of these and other factors, it may be difficult to maintain our gross profit percentage consistent with historical periods and it may decline in the future.

Operating Expenses

Our operating expenses are summarized in the following table:

	Three Months Ended						Nine Months Ended
	January 1, 2012			December 26, 2010			January 1, 2012			December 26, 2010
	(Dollars in millions)
Operating expenses:
Engineering and development	$	36.9		$	33.1		$	112.5		$	100.6
Sales and marketing		21.5			20.1			63.2			61.0
General and administrative		8.8			9.1			26.8			25.6
Special charges		—			—			—			0.9
	$	67.2		$	62.3		$	202.5		$	188.1
Percentage of net revenues:
Engineering and development		24.1	%		21.3	%		24.8	%		22.6	%
Sales and marketing		14.1			12.9			13.9			13.7
General and administrative		5.8			5.8			5.9			5.8
Special charges		—			—			—			0.2
		44.0	%		40.0	%		44.6	%		42.3	%

Engineering and Development. Engineering and development expenses consist primarily of compensation and related employee benefit costs, service and material costs, occupancy and equipment costs and related computer support costs. During the three months ended January 1, 2012, engineering and development expenses increased to $36.9 million from $33.1 million for the three months ended December 26, 2010. The increase was primarily due to higher cash compensation and related employee benefit costs, principally due to an increase in headcount related to our planned incremental investments to drive future revenue growth.

During the nine months ended January 1, 2012, engineering and development expenses increased to $112.5 million from $100.6 million for the nine months ended December 26, 2010. The increase was primarily due to an $8.9 million increase in cash compensation and related employee benefit costs, primarily due to an increase in headcount related to our planned incremental investments to drive future revenue growth, and a $2.2 million increase in equipment related costs.

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We believe continued investments in engineering and development activities are critical to achieving future design wins, expansion of our customer base and revenue growth opportunities.

Sales and Marketing. Sales and marketing expenses consist primarily of compensation and related employee benefit costs, sales commissions, promotional activities and travel for sales and marketing personnel. During the three months ended January 1, 2012, sales and marketing expenses increased to $21.5 million from $20.1 million for the three months ended December 26, 2010. The increase was primarily due to an increase in cash compensation and related employee benefit costs, principally due to an increase in headcount.

Sales and marketing expenses increased to $63.2 million for the nine months ended January 1, 2012 from $61.0 million for the nine months ended December 26, 2010. The increase in sales and marketing expenses was primarily due to an increase in cash compensation and related employee benefit costs, principally due to an increase in headcount.

We believe continued investments in our sales and marketing organizational infrastructure and related marketing programs are critical to the success of our strategy of expanding our customer base and enhancing relationships with our existing customers.

General and Administrative. General and administrative expenses consist primarily of compensation and related employee benefit costs for executive, finance, accounting, human resources, legal and information technology personnel. Non-compensation components of general and administrative expenses include accounting, legal and other professional fees, facilities expenses and other corporate expenses. General and administrative expenses decreased to $8.8 million for the three months ended January 1, 2012 from $9.1 million for the three months ended December 26, 2010.

General and administrative expenses increased to $26.8 million for the nine months ended January 1, 2012 from $25.6 million for the nine months ended December 26, 2010. The increase in general and administrative expenses was primarily due to an increase in cash compensation and related employee benefit costs.

Special Charges. During the nine months ended December 26, 2010, we recorded special charges of $0.9 million consisting of exit costs associated with severance benefits for involuntarily terminated employees, primarily related to the consolidation of certain engineering functions.

Interest and Other Income, Net

Components of our interest and other income, net, are as follows:

	Three Months Ended						Nine Months Ended
	January 1, 2012			December 26, 2010			January 1, 2012			December 26, 2010
	(In millions)
Interest income	$	0.9		$	0.8		$	2.6		$	2.7
Net gains (losses) on investment securities		(0.1	)		0.3			0.7			2.0
Other		—			(0.3	)		(0.4	)		(0.4	)
	$	0.8		$	0.8		$	2.9		$	4.3

Income Taxes

Our provision (benefit) for income taxes was $4.2 million and $9.8 million for the three and nine months ended January 1, 2012, respectively, and $(9.1) million and $2.2 million for the three and nine months ended December 26, 2010, respectively.

Our effective tax rate was 10% and 2% for the nine months ended January 1, 2012 and December 26, 2010, respectively. Our effective tax rate for the nine months ended January 1, 2012 was favorably impacted by certain discrete tax related items, principally the resolution of state income tax examinations in the first quarter of fiscal 2012. The lower effective tax rate for the nine months ended December 26, 2010 was primarily due to $14.6 million of income tax benefits related to the expiration of certain statutes of limitation, the retroactive reinstatement of the federal research tax credit and certain other items that were recorded in the third quarter of fiscal 2011.

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Our federal consolidated income tax returns for fiscal years 2008 and 2009 are currently under examination by the Internal Revenue Service. We do not believe that the results of these examinations will have a material impact on our financial condition or results of operations.

Given the global scope of our operations, and the complexity of global tax and transfer pricing rules and regulations, it is difficult to estimate earnings within each tax jurisdiction. If actual earnings within each tax jurisdiction differ materially from our estimates, we may not achieve our expected effective tax rate. Additionally, our effective tax rate may be impacted by other items including the tax effects of acquisitions, dispositions, newly enacted tax legislation, examinations by tax authorities, stock-based compensation and uncertain tax positions.

Liquidity and Capital Resources

Our combined balances of cash, cash equivalents and marketable securities increased to $395.8 million as of January 1, 2012 from $384.1 million as of April 3, 2011. As of January 1, 2012 and April 3, 2011, our international subsidiaries held $308.7 million and $258.3 million, respectively, of our total cash, cash equivalents and marketable securities. These holdings by our international subsidiaries as of January 1, 2012 consisted primarily of debt securities due from U.S. issuers, including the U.S. government and related agencies, and U.S. dollar denominated cash and money market funds. Certain foreign regulations could impact our ability to transfer funds to the United States. We currently intend to reinvest the funds held outside of the United States in our international operations and, as a result, do not intend to repatriate these funds. Should we decide to repatriate funds held outside of the United States, we may incur a significant tax obligation.

We believe that existing cash, cash equivalents, marketable securities and expected cash flow from operations will provide sufficient funds to finance our operations for at least the next twelve months. However, it is possible that we may need to supplement our existing sources of liquidity to finance our activities beyond the next twelve months or for the future acquisition of businesses, products or technologies and there can be no assurance that sources of liquidity will be available to us at that time.

Cash provided by operating activities increased to $134.1 million for the nine months ended January 1, 2012 from $117.3 million for the nine months ended December 26, 2010. Operating cash flow for the nine months ended January 1, 2012 consisted of our net income of $91.1 million and net non-cash expenses of $51.1 million, partially offset by net cash used as a result of changes in operating assets and liabilities of $8.1 million. The changes in operating assets and liabilities included a $12.2 million increase in accounts receivable, partially offset by a $4.5 million increase in accrued taxes. The increase in accounts receivable was primarily due to the timing of cash collections. The increase in accrued taxes was primarily due to the timing of payment obligations.

Cash provided by operating activities of $117.3 million for the nine months ended December 26, 2010 consisted of our net income of $105.8 million and net non-cash expenses of $59.4 million, partially offset by net cash used as a result of changes in operating assets and liabilities of $47.9 million. The changes in operating assets and liabilities included a $21.1 million decrease in accrued taxes, a $10.8 million increase in accounts receivable, a $6.5 million increase in inventories and a $6.2 million decrease in accounts payable. The decrease in accrued taxes was primarily due to the expiration of certain statutes of limitation, the retroactive reinstatement of the federal research tax credit and the timing of payment obligations. The increase in accounts receivable was primarily due to the timing of cash collections and an increase in net revenues. The increase in inventories was primarily due to advanced purchases of silicon chips to maintain flexibility due to long lead times for these products. The decrease in accounts payable was primarily due to the timing of payment obligations.

Cash used in investing activities was $111.6 million for the nine months ended January 1, 2012 and consisted of $88.1 million of net purchases of available-for-sale securities and $23.5 million of purchases of property and equipment. During the nine months ended December 26, 2010, cash used in investing activities was $68.8 million and consisted primarily of $75.0 million of net purchases of available-for-sale securities and $17.9 million of purchases of property and equipment, partially offset by $23.8 million of proceeds from the disposition of trading securities at par value.

As our business grows, we expect capital expenditures to increase in the future as we continue to invest in machinery and equipment, more costly engineering and production tools for new technologies, and enhancements to our corporate information technology infrastructure.

Cash used in financing activities of $96.1 million for the nine months ended January 1, 2012 consisted of our purchase of $103.9 million of common stock under our stock repurchase program and $5.4 million for minimum tax withholdings paid on behalf of employees for restricted stock units that vested during the period, partially offset by $13.2 million of proceeds from the issuance of common stock and excess tax benefits from stock-based awards. During the nine months ended December 26, 2010, cash used in

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financing activities of $132.5 million consisted of our purchase of $157.0 million of common stock under our stock repurchase programs and $6.7 million for minimum tax withholdings paid on behalf of employees for restricted stock units that vested during the period, partially offset by $31.2 million of proceeds from the issuance of common stock and excess tax benefits from stock-based awards.

Since fiscal 2003, we have had various stock repurchase programs that authorized the purchase of up to $1.95 billion of our outstanding common stock, including a program approved in November 2011 authorizing the repurchase of up to an additional $200 million of our outstanding common stock. As of January 1, 2012, we had repurchased a total of 110.5 million shares of our common stock under our stock repurchase programs for an aggregate purchase price of $1.74 billion. During the nine months ended January 1, 2012, we repurchased 7.2 million shares for an aggregate purchase price of $104.1 million. Pursuant to the existing stock repurchase programs, we are authorized to repurchase shares with an aggregate cost of up to $214.0 million as of January 1, 2012.

We have certain contractual obligations and commitments to make future payments in the form of non-cancelable purchase orders to our suppliers and commitments under operating lease arrangements. A summary of our contractual obligations as of January 1, 2012, and their impact on our cash flows in future fiscal years, is as follows:

	2012 (Remaining three months)		2013		2014		2015		2016		Thereafter		Total
	(In millions)
Operating leases	$	2.1	$	6.5	$	5.9	$	4.1	$	1.9	$	4.1	$	24.6
Non-cancelable purchase obligations		30.7		8.0		—		—		—		—		38.7
Total	$	32.8	$	14.5	$	5.9	$	4.1	$	1.9	$	4.1	$	63.3

The amount of unrecognized tax benefits, including related accrued interest and penalties, was $62.4 million as of January 1, 2012. We are not able to provide a reasonable estimate of the timing of future tax payments related to these obligations.

Critical Accounting Policies and Estimates

The preparation of financial statements in accordance with U.S. generally accepted accounting principles requires us to make estimates and judgments that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of net revenues and expenses during the reporting period. We base our estimates on historical experience and on various other factors that we believe to be reasonable under the circumstances, including the current economic environment, the results of which form the basis for making judgments about the carrying values of assets and liabilities. We believe the accounting policies described below to be our most critical accounting policies. These accounting policies are affected significantly by judgments, assumptions and estimates used in the preparation of the financial statements and actual results could differ materially from the amounts reported based on these policies.

Revenue Recognition

We recognize revenue from product sales when all of the following fundamental criteria are met: (i) persuasive evidence of an arrangement exists, (ii) delivery has occurred, (iii) the price to the customer is fixed or determinable and (iv) collection of the resulting accounts receivable is reasonably assured.

For all sales, we use a binding purchase order or a signed agreement as evidence of an arrangement. Delivery occurs when goods are shipped and title and risk of loss transfer to the customer, in accordance with the terms specified in the arrangement with the customer. The customer’s obligation to pay and the payment terms are set at the time of delivery and are not dependent on the subsequent resale of our product. However, certain of our sales are made to distributors under agreements that contain a limited right to return unsold product and price protection provisions. These return rights and price protection provisions limit our ability to reasonably estimate product returns and the final price of the inventory sold to distributors. As a result, the price to the customer is not fixed or determinable at the time products are delivered to distributors. Accordingly, we recognize revenue from these distributors based on the sell-through method using inventory information provided by the distributor. At times, we provide standard incentive programs to our customers. We account for our competitive pricing incentives and rebates as a reduction of revenue in the period the related revenue is recorded based on the specific program criteria and historical experience. In addition, we record provisions against revenue and cost of revenue for estimated product returns in the same period that revenue is recognized. These provisions are based on historical experience as well as specifically identified product returns. Service and other revenue is recognized when earned and receipt is reasonably assured.

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For those sales that include multiple deliverables, we allocate revenue based on the relative selling price of the individual components. When more than one element, such as hardware and services, are contained in a single arrangement, we allocate revenue between the elements based on each element’s relative selling price, provided that each element meets the criteria for treatment as a separate unit of accounting. When applying the relative selling price method, we determine the selling price for each deliverable using vendor-specific objective evidence (VSOE) of the selling price, if it exists. In order to establish VSOE of the selling price, we must regularly sell the product and/or service on a standalone basis with a substantial majority of the sales priced within a relatively narrow range. If VSOE of the selling price cannot be determined, we then consider third party evidence (TPE) of the selling price. Generally, we are not able to determine TPE due to the lack of similar products and services sold by other companies within the industry. If neither VSOE nor TPE exists, we determine the estimated selling price based on multiple factors including, but not limited to, cost, gross margin, market conditions and pricing practices. Revenue allocated to each element is then recognized when the basic revenue recognition criteria is met for each deliverable.

We sell certain software products and related post-contract customer support. We recognize revenue from software products when all of the following fundamental criteria are met: (i) persuasive evidence of an arrangement exists, (ii) delivery has occurred, (iii) the price to the customer is fixed or determinable and (iv) collection of the resulting accounts receivable is probable. Revenue is allocated to undelivered elements based upon VSOE of the fair value of the element. VSOE of the fair value is based upon the price charged when the element is sold separately. Revenue allocated to each element is then recognized when the basic revenue recognition criteria are met for each element. If we are unable to determine VSOE of fair value for an undelivered element, the entire amount of revenue from the arrangement is deferred and recognized over the service period or when all elements have been delivered.

Stock-Based Compensation

We recognize compensation expense for all stock-based awards made to employees and non-employee directors, including stock options, restricted stock units and stock purchases under our Employee Stock Purchase Plan (the ESPP), based on estimated fair values on the measurement date, which is generally the date of grant. Stock-based compensation is recognized for the portion of the award that is ultimately expected to vest. Forfeitures are estimated at the time of grant based on historical trends and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. We recognize stock-based compensation expense for awards that are subject to only a service condition on a straight-line basis over the requisite service period for the entire award, which is the vesting period for stock options and restricted stock units, and the offering period for the ESPP. For all other stock-based awards, stock-based compensation is recognized on a straight-line basis over the requisite service period for each separately vesting portion of the award. The determination of fair value of stock-based awards on the date of grant using an option-pricing model is affected by our stock price as well as assumptions regarding a number of highly complex and subjective variables. These variables include, but are not limited to, our expected stock price volatility over the term of the awards and actual and projected employee stock option exercise behaviors. In estimating expected stock price volatility, we use a combination of both historical volatility, calculated based on the daily closing prices of our common stock over a period equal to the expected term of the option, and implied volatility, utilizing market data of actively traded options on our common stock. We believe that the historical volatility of the price of our common stock over the expected term of the option is a strong indicator of the expected future volatility. We also believe that implied volatility takes into consideration market expectations of how future volatility will differ from historical volatility. Accordingly, we believe a combination of both historical and implied volatility provides the best estimate of the future volatility of the market price of our common stock. Changes in the subjective assumptions can materially affect the estimated fair value of stock-based awards.

Income Taxes

We utilize the asset and liability method of accounting for income taxes. Income tax positions taken or expected to be taken in a tax return should be recognized in the first reporting period that it is more likely than not the tax position will be sustained upon examination. A tax position that meets the more-likely-than-not recognition threshold is initially and subsequently measured as the largest amount of tax benefit that is greater than 50% likely of being realized upon settlement with a taxing authority that has full knowledge of all relevant information. Previously recognized income tax positions that fail to meet the recognition threshold in a subsequent period are derecognized in that period. Differences between actual results and our assumptions, or changes in our assumptions in future periods, are recorded in the period they become known. We record potential accrued interest and penalties related to unrecognized tax benefits in income tax expense.

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Deferred income taxes are recognized for the future tax consequences of temporary differences using enacted statutory tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Temporary differences include the difference between the financial statement carrying amounts and the tax bases of existing assets and liabilities and operating loss and tax credit carryforwards. The effect on deferred taxes of a change in tax rates is recognized in earnings in the period that includes the enactment date.

A valuation allowance is recorded when it is more likely than not that some or all of a deferred tax asset will not be realized. An adjustment to earnings would occur if we determine that we are able to realize a different amount of our deferred tax assets than currently expected.

As a multinational corporation, we are subject to complex tax laws and regulations in various jurisdictions. The application of tax laws and regulations is subject to legal and factual interpretation, judgment and uncertainty. Tax laws themselves are subject to change as a result of changes in fiscal policy, changes in legislation, evolution of regulations and court rulings. Therefore, the actual liability for U.S. or foreign taxes may be materially different from our estimates, which could result in the need to record additional liabilities or potentially to reverse previously recorded tax liabilities. Differences between actual results and our assumptions, or changes in our assumptions in future periods, are recorded in the period they become known.

Investment Securities

Investment securities include available-for-sale securities, trading securities and other investment securities. Our investment securities are classified in the consolidated balance sheets based on the nature of the security and the availability for use in current operations.

Available-for-sale securities are recorded at fair value, based on quoted market prices or other observable inputs. Unrealized gains and losses, net of related income taxes, on available-for-sale securities are excluded from earnings and reported as a separate component of accumulated other comprehensive income until realized.

Trading securities are recorded at fair value with unrealized holding gains and losses included in earnings and reported in interest and other income, net. In the absence of quoted market prices, these securities are valued based on an income approach using an estimate of future cash flows.

Other investment securities are accounted for under the cost method and recorded at the lower of fair value or cost.

We recognize an impairment charge on available-for-sale securities when the decline in the fair value of an investment below its cost basis is judged to be other-than-temporary. If we intend to sell the security or it is more likely than not that we will be required to sell the security before recovery of its amortized cost basis less any current-period credit loss, we would recognize the entire impairment in earnings. If we do not intend to sell the security and it is not more likely than not that we will be required to sell the security before recovery of its amortized cost basis less any current-period credit loss, the other-than-temporary impairment is separated into (a) the amount representing the credit loss and (b) the amount related to all other factors. The amount of the other-than-temporary impairment related to the credit loss is recognized in earnings. The amount of the other-than-temporary impairment related to other factors is recognized in other comprehensive income, net of applicable taxes. Significant judgment is required in determining the fair value of investment securities in inactive markets as well as determining when declines in fair value constitute an other-than-temporary impairment and the portion of any impairment that is due to a credit loss. We consider various factors in determining whether to recognize an impairment charge, including the current financial and credit market environment, the financial condition and near-term prospects of the issuer of the security, the magnitude of the loss compared to the cost of the investment, the length of time the investment has been in a loss position and our intent and ability to hold the investment for a period of time sufficient to allow for any anticipated recovery of market value.

Realized gains or losses are determined on a specific identification basis and reported in interest and other income, net, as incurred.

Inventories

Inventories are stated at the lower of cost (first-in, first-out) or market. We write down the carrying value of our inventory to estimated net realizable value for estimated excess and obsolete inventory based upon assumptions about future demand and market conditions. These assumptions are based on economic conditions and trends (both current and projected), anticipated customer demand and acceptance of our current products, expected future products and other assumptions. If actual market conditions are less favorable than those projected by management, additional write-downs may be required. Once we write down the carrying value of inventory, a new cost basis is established. Subsequent changes in facts and circumstances do not result in an increase in the newly established cost basis.

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Goodwill and Other Intangible Assets

Goodwill is recorded as the difference, if any, between the aggregate consideration paid for an acquisition and the fair value of the net tangible and intangible assets acquired. The amounts and useful lives assigned to intangible assets acquired, other than goodwill, impact the amount and timing of future amortization. The amount assigned to in-process research and development is capitalized and accounted for as an indefinite-lived intangible asset until the underlying projects are completed or abandoned.

Goodwill is not amortized but instead is tested at least annually for impairment, or more frequently when events or changes in circumstances indicate a potential impairment, by comparing the carrying value to the fair value of the reporting unit to which the goodwill is assigned. A two-step test is used to identify the potential impairment and to measure the amount of impairment, if any. The first step is to compare the fair value of the reporting unit with its carrying amount, including goodwill. If the fair value of the reporting unit is less than its carrying amount, goodwill is considered impaired and the loss is measured by performing step two. Under step two, the impairment loss is measured by comparing the implied fair value of the reporting unit goodwill with the carrying amount of that goodwill. We perform the annual test for impairment as of the first day of our fiscal fourth quarter.

The initial recording and subsequent evaluation for impairment of goodwill and purchased intangible assets requires the use of significant management judgment regarding the forecasts of future operating results. It is possible that our business plans may change and our estimates used may prove to be inaccurate. If our actual results, or the plans and estimates used in future impairment analyses, are lower than current estimates used, we could incur impairment charges.

Long-Lived Assets

Long-lived assets, including property and equipment and purchased intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. Significant judgment is required in determining whether a potential indicator of impairment of our long-lived assets exists. Recoverability of assets to be held and used is measured by the comparison of the carrying amount of an asset or asset group to future undiscounted net cash flows expected to be generated by the asset or asset group. If such an asset or asset group is considered to be impaired, the impairment to be recognized is measured as the amount by which the carrying amount of the asset or asset group exceeds the fair value of the asset or asset group. Assets to be disposed of are reported at the lower of their carrying amount or fair value less costs to sell. Estimating future net cash flows and determining proper asset groupings for the purpose of this impairment test requires the use of significant management judgment. If our actual results, or estimates used in future impairment analyses, are lower than our current estimates, we could incur impairment charges.

Recently Issued Accounting Standards Not Yet Effective

In May 2011, the Financial Accounting Standards Board (FASB) issued an accounting standards update on fair value measurements that clarifies the application of existing guidance and disclosure requirements, changes certain fair value measurement principles and requires additional disclosures about fair value measurements. This standard is effective prospectively for interim and annual periods beginning after December 15, 2011. The adoption of this standard will not have a material impact on our consolidated financial statements.

In June 2011, the FASB issued an accounting standards update regarding the presentation of comprehensive income. Presentation of the components of net income, the components of other comprehensive income and total comprehensive income will be required in either a single continuous statement of comprehensive income or in two separate but consecutive statements. In December 2011, the FASB deferred the requirement to present adjustments for items that are reclassified from other comprehensive income to net income in the statement where the components of net income and the components of other comprehensive income are presented. This standard is effective retrospectively for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2011. The adoption of this standard will not have a material impact on our consolidated financial statements.

In September 2011, the FASB issued an accounting standards update regarding the testing of goodwill for impairment. This standard provides an option to perform a qualitative assessment for goodwill impairment to determine whether the two-step quantitative impairment test is required. This standard is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. The adoption of this standard will not have a material impact on our consolidated financial statements.

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Item 3.    Quantitative and Qualitative Disclosures About Market Risk

Our cash and cash equivalents are not subject to significant interest rate risk due to the short maturities of these instruments. As of January 1, 2012, the carrying value of our cash and cash equivalents approximates fair value.

We maintain a portfolio of marketable securities consisting primarily of U.S. government and agency securities, corporate debt obligations, asset and mortgage-backed securities and municipal bonds, the majority of which have remaining terms of three years or less. We are exposed to fluctuations in interest rates as movements in interest rates can result in changes in the market value of our investments in debt securities. However, due to the short-term expected duration of our portfolio of marketable securities, we do not believe that we are subject to material interest rate risk.

In accordance with our investment guidelines, we only invest in instruments with high credit quality ratings and we limit our exposure to any one issuer or type of investment. Our portfolio of marketable securities as of January 1, 2012 consists of $321.6 million of securities that are classified as available-for-sale. As of January 1, 2012, we had gross unrealized losses associated with our available-for-sale securities of $0.6 million that were determined by management to be temporary in nature.

We do not use derivative financial instruments.

Item 4.    Controls and Procedures

We maintain disclosure controls and procedures to ensure that information we are required to disclose in reports that we file or submit under the Securities Exchange Act of 1934, as amended, (i) is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms and (ii) is accumulated and communicated to our management, including our chief executive officer and chief financial officer, to allow timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

Our management evaluated, with the participation of our chief executive officer and chief financial officer, the effectiveness of our disclosure controls and procedures, as such term is defined under Rules 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended. Based on this evaluation, our chief executive officer and chief financial officer have concluded that our disclosure controls and procedures were effective at a reasonable assurance level as of January 1, 2012. There was no change in our internal control over financial reporting during our quarter ended January 1, 2012 that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II.

OTHER INFORMATION

Item 1A.    Risk Factors

We have updated the risk factors discussed in Item 1A of our Annual Report on Form 10-K for the year ended April 3, 2011, as set forth below. Except for the addition of the first risk factor set forth below, we do not believe any of the updates constitute material changes from the risk factors previously discussed in our Annual Report on Form 10-K for the year ended April 3, 2011.

We have entered into a definitive agreement to sell the product lines and certain assets associated with our InfiniBand business, however we cannot guarantee the transaction will close.

We have entered into an Asset Purchase Agreement with Intel Corporation to sell the product lines and certain assets associated with our InfiniBand business in exchange for $125 million in cash, subject to downward adjustment based on inventory at closing. However, we may not be able to complete this transaction if we are unable to satisfy various conditions and contingencies prior to closing. Either party may terminate the agreement if the transaction has not been completed by May 19, 2012 or in the event of certain material breaches. If we fail to complete the transaction, our relations with our employees and customers may be adversely affected.

Our operating results may be adversely affected by unfavorable economic conditions.

The United States and other countries around the world have experienced, and are continuing to experience, economic weakness and uncertainty. Economic uncertainty has adversely affected, and in the future may adversely affect, information technology, or IT, spending rates. Reductions in IT spending rates could result in reduced sales volumes, lower prices for our products, longer sales cycles, increased inventory provisions and increased production costs, which could negatively impact our results of operations.

As a result of worldwide economic uncertainty, it is extremely difficult for us and our customers to forecast future revenue levels based on historical information and trends. Portions of our expenses are fixed and others are tied to expected levels of revenue. To the extent that we do not achieve our anticipated level of revenue, our operating results could be adversely affected until such expenses are reduced to an appropriate level. We may not be able to identify and implement appropriate cost savings in a timely manner.

Our operating results may fluctuate in future periods, which could cause our stock price to decline.

We have experienced, and expect to experience in future periods, fluctuations in sales and operating results from quarter to quarter. In addition, there can be no assurance that we will maintain our current gross margins or profitability in the future. A significant portion of our net revenues in each fiscal quarter results from orders booked in that quarter. Orders placed by major customers are typically based on their forecasted sales and inventory levels for our products.

Fluctuations in our quarterly operating results may also be the result of:

• the timing, size and mix of orders from customers;

• gain or loss of significant customers;

• industry consolidation among both our competitors and our customers;

• customer policies pertaining to desired inventory levels of our products;

• sales discounts and customer incentives;

• the availability and sale of new products;

• changes in our average selling prices;

• variations in manufacturing capacities, efficiencies and costs;

• the availability and cost of components, including silicon chips;

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• variations in product development costs, especially related to advanced technologies;

• variations in operating expenses;

• changes in effective income tax rates, including those resulting from changes in tax laws;

• our ability to timely produce products that comply with new environmental restrictions or related requirements of our original equipment manufacturer, or OEM, customers;

• actual events, circumstances, outcomes and amounts differing from judgments, assumptions and estimates used in determining the value of certain assets (including the amounts of related valuation allowances), liabilities and other items reflected in our consolidated financial statements;

• the timing of revenue recognition and revenue deferrals;

• gains or losses related to our marketable securities; or

• changes in accounting rules or our accounting policies.

In addition, our quarterly results of operations are influenced by competitive factors, including the pricing and availability of our products and our competitors’ products. Furthermore, communications regarding new products and technologies could cause our customers to defer or cancel purchases of our products. Order deferrals by our customers, delays in our introduction of new products, and longer than anticipated design-in cycles for our products have in the past adversely affected our quarterly results of operations. Due to these factors, as well as other unanticipated factors, it is likely that in some future quarter or quarters our operating results will be below the expectations of public market analysts or investors, and as a result, the price of our common stock could significantly decrease.

We expect gross margin to vary over time and our recent level of gross margin may not be sustainable.

Our recent level of gross margin may not be sustainable and may be adversely affected by numerous factors, including:

• changes in product mix;

• transitions to products based on emerging technologies, such as 10Gb Ethernet, which may have lower gross margins;

• changes in manufacturing volumes over which fixed costs are absorbed;

• increased price competition;

• introduction of new products by us or our competitors, including products with advantages in price, performance or features;

• our inability to reduce manufacturing-related or component costs;

• entry into new markets or the acquisition of new businesses;

• amortization and impairments of purchased intangible assets;

• sales discounts and customer incentives;

• increases in material, labor or overhead costs;

• excess inventory and inventory holding charges;

• changes in distribution channels; and

• increased warranty costs.

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Our stock price may be volatile.

The market price of our common stock has fluctuated substantially, and there can be no assurance that such volatility will not continue. Several factors could impact our stock price including, but not limited to:

• differences between our actual revenues and operating results and the published expectations of public market analysts;

• quarterly fluctuations in our revenues and operating results;

• introduction of new products or changes in product pricing policies by our competitors or us;

• conditions in the markets in which we operate;

• changes in market projections by industry forecasters;

• changes in estimates of our earnings or rating upgrades/downgrades of our stock by public market analysts;

• operating results or forecasts of our major customers or competitors;

• rumors or dissemination of false information; and

• general economic and geopolitical conditions.

In addition, stock markets have experienced extreme price and volume volatility in recent years and stock prices of technology companies have been especially volatile. This volatility has had a substantial effect on the market prices of securities of many public companies for reasons frequently unrelated to the operating performance of the specific companies. These broad market fluctuations could adversely affect the market price of our common stock.

Our business is dependent, in large part, on the continued growth of the networking markets that we serve and if these markets do not continue to develop, our business will suffer.

Our products are used in storage, high performance computing, or HPC, and converged networks, and therefore our business is dependent on these markets. Our success in generating revenue in these markets will depend on, among other things, our ability to:

• educate potential OEM customers, distributors, resellers, system integrators, storage system providers and end-user organizations about the benefits of our products;

• maintain and enhance our relationships with OEM customers, distributors, resellers, system integrators and storage system providers;

• predict and base our products on standards that ultimately become industry standards; and

• achieve and maintain interoperability between our products and other equipment and components from diverse vendors.

Our financial condition will be materially harmed if we do not maintain and gain market acceptance of our products.

The markets in which we compete involve rapidly changing technology, evolving industry standards and continuing improvements in products and services. Our future success depends, in part, on our ability to:

• enhance our current products and develop and introduce, in a timely manner, new products that keep pace with technological developments and industry standards;

• compete effectively on the basis of price and performance; and

• adequately address OEM and end-user customer requirements and achieve market acceptance.

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We believe that to remain competitive, we will need to continue to develop new products and enter new markets, which will require significant investment. Our competitors may be developing alternative technologies, which may adversely affect the market acceptance of our products. Although we continue to explore and develop products based on new technologies, a substantial portion of our revenues is generated today from Fibre Channel technology. If alternative technologies are adopted by the industry, we may not be able to develop products for these technologies in a timely manner. Further, even if alternative technologies do augment Fibre Channel revenues, our products may not be fully developed in time to be accepted by our customers. Even if our new products are developed on time, we may not be able to manufacture them at competitive prices or in sufficient volumes.

Some of our products are based on Fibre Channel over Ethernet, or FCoE, 10Gb Ethernet or InfiniBand technologies. FCoE is a relatively new converged networking technology that provides a unified storage and data network over Enhanced Ethernet, while preserving the investment by end users in their existing Fibre Channel infrastructure and storage. As with most emerging technologies, it is expected that the market for FCoE will take a number of years to fully develop and mature. We expect products based on FCoE to supplement, and perhaps replace, certain products based on Fibre Channel technology. 10Gb Ethernet is a developing technology for use in enterprise data centers. This emerging market includes well-established participants who have significantly more sales and marketing resources to dedicate to developing and penetrating the market than we do. InfiniBand is currently used primarily in high performance computing environments, and may not be adopted at the rate or to the extent that we anticipate, or the market may not materialize at all. An inability to maintain, or build on, our market share in the Fibre Channel, converged, 10Gb Ethernet or InfiniBand markets, or the failure of these markets to expand, could have a material adverse effect on our business or results of operations.

We depend on a small number of customers and any decrease in revenues from any one of our major customers could adversely affect our results of operations and cause our stock price to decline.

A small number of customers account for a substantial portion of our net revenues, and we expect that a small number of customers will continue to represent a substantial portion of our net revenues in the foreseeable future. Our top ten customers accounted for 85% and 84% of net revenues for the nine months ended January 1, 2012 and December 26, 2010, respectively. Total revenue from our two largest customers, Hewlett-Packard Company and International Business Machines Corporation, together accounted for over 40% of net revenues during the nine months ended January 1, 2012 and December 26, 2010. We are also subject to credit risk associated with the concentration of our accounts receivable.

Our customers generally order products through written purchase orders instead of long-term supply contracts and, therefore, are generally not obligated to purchase products from us for any extended period. Major customers also have significant leverage over us and may attempt to change the sales terms, including pricing, customer incentives and payment terms, or insist that we undertake or fund significant aspects of the design, qualification and testing that our customers have typically been responsible for, either of which could have a material adverse effect on our business, financial condition or results of operations. As our OEM customers are pressured to reduce prices as a result of competitive factors, we may be required to contractually commit to price reductions for our products before we know how, or if, cost reductions can be achieved. If we are unable to achieve these cost reductions, our gross margins could decline and such a decline could have a material adverse effect on our business, financial condition or results of operations.

The ongoing consolidation in the technology industry could adversely impact our business. There is the potential for some of our customers to merge with or acquire one or more of our other customers. There is also a potential that one of our large customers could acquire one of our current competitors. In either case, demand for our products could decrease as a result of such industry consolidation, which could have a material adverse effect on our business, financial condition or results of operations.

Competition within the markets for products such as ours is intense and includes various established competitors.

The markets for networking infrastructure components are highly competitive and are characterized by short product life cycles, price erosion, rapidly changing technology, frequent product performance improvements and evolving industry standards. Due to the diversity of products required in storage, HPC and converged networking infrastructure, we compete with many companies. In the traditional enterprise storage Fibre Channel adapter market, our primary competitor is Emulex Corporation, with Brocade Communications Systems, Inc. also participating. In the Internet Small Computer Systems Interface, or iSCSI, adapter market, our primary competitor is Broadcom Corporation and we also compete indirectly with companies offering software initiator solutions. In the 10Gb Ethernet adapter market, which includes converged networking products, we compete with Emulex Corporation, Brocade

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Communications Systems, Inc., Broadcom Corporation and Intel Corporation. In the Fibre Channel switch and storage router markets, we compete primarily with Brocade Communications Systems, Inc. and Cisco Systems, Inc. In the InfiniBand adapter and switch markets, we compete primarily with Mellanox Technologies, Ltd. We may also compete with some of our server and storage systems customers, some of which have the capability to develop products comparable to those we offer.

We need to continue to develop products appropriate to our markets to remain competitive as our competitors continue to introduce products with improved features. While we continue to devote significant resources to engineering and development, these efforts may not be successful or competitive products may not be developed and introduced in a timely manner. In addition, while relatively few competitors offer a full range of storage, HPC and converged networking infrastructure products, additional domestic and foreign manufacturers may increase their presence in these markets either through the development of new products or through industry consolidation. We may not be able to compete successfully against these or other competitors. If we are unable to design, develop or introduce competitive new products on a timely basis, our future operating results may be materially and adversely affected.

Our products are complex and may contain undetected software or hardware errors that could lead to an increase in our costs, reduce our net revenues or damage our reputation.

Our products are complex and may contain undetected software or hardware errors when first introduced or as newer versions are released. We are also exposed to risks associated with latent defects in existing products and to risks that components purchased from third-party subcontractors and incorporated into our products may not meet our specifications or may otherwise fail prematurely. From time to time, we have found errors in existing, new or enhanced products. In addition, our products are frequently combined with other products, including software, from other vendors, and these products often need to interface with existing networks, each of which have different specifications and utilize multiple protocol standards. As a result, when problems occur, it may be difficult to identify the source of the problem. The occurrence of hardware or software errors could adversely affect the sales of our products, cause us to incur significant warranty and repair costs, divert the attention of our engineering personnel from our product development efforts and cause significant customer relations problems.

We expect the pricing of our products to continue to decline, which could reduce our revenues, gross margins and profitability.

We expect the average unit prices of our products (on a like-for-like product comparison basis) to decline in the future as a result of competitive pricing pressures, increased sales discounts and customer incentives, new product introductions by us or our competitors, or other factors. If we are unable to offset these factors by increasing sales volumes or reducing product manufacturing costs, our total revenues and gross margins may decline. In addition, we must develop and introduce new products and product enhancements. Moreover, most of our expenses are fixed in the short-term or incurred in advance of receipt of corresponding revenues. As a result, we may not be able to decrease our spending to offset any unexpected shortfall in revenues. If this occurs, our revenues, gross margins and profitability could decline.

We are dependent on sole source and limited source suppliers for certain key components.

Certain key components used in the manufacture of our products are purchased from single or limited sources. Application-specific integrated circuits, or ASICs, are purchased from single sources and other key components such as microprocessors, logic chips, power supplies and programmable logic devices are purchased from limited sources. If one of these suppliers experiences an interruption in its ability to supply our needs, or chooses to sever its relationship with us, we may be unable to produce certain of our products, which could result in the loss of customers and have a material adverse effect on our results of operations.

We are dependent on worldwide third-party subcontractors and contract manufacturers.

Third-party subcontractors located outside the United States assemble and test certain products for us. To the extent that we rely on third-party subcontractors to perform these functions, we will not be able to directly control product delivery schedules and quality assurance. This lack of control may result in product shortages or quality assurance problems that could delay shipments of products or increase manufacturing, assembly, testing or other costs. If a subcontractor experiences capacity constraints or financial difficulties, suffers damage to its facilities, experiences power outages or any other disruption of assembly or testing capacity, we may not be able to obtain alternative assembly and testing services in a timely manner.

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In addition, the loss of any of our major third-party contract manufacturers could significantly impact our ability to produce products for an indefinite period of time. Qualifying a new contract manufacturer and commencing volume production is a lengthy and expensive process. Some customers will not purchase any products, other than a limited number of evaluation units, until they qualify the manufacturing line for the product, and we may not always be able to satisfy the qualification requirements of these customers. If we are required to change a contract manufacturer or if a contract manufacturer experiences delays, disruptions, capacity constraints, component parts shortages or quality control problems in its manufacturing operations, shipment of our products to our customers could be delayed, resulting in loss or postponement of revenues and potential harm to our competitive position and relationships with customers.

If we are unable to attract and retain key personnel, we may not be able to sustain or grow our business.

Our future success largely depends on our key engineering, sales, marketing and executive personnel, including highly skilled semiconductor design personnel and software developers, as well as Simon Biddiscombe, our Chief Executive Officer, and H.K. Desai, our Executive Chairman. Our retention of both Mr. Biddiscombe and Mr. Desai are particularly important to our business. If we lose the services of Mr. Biddiscombe, Mr. Desai or other key personnel, or do not hire or retain other personnel for key positions, our business could be adversely affected.

We believe that the market for key personnel in the industries in which we compete is highly competitive. In particular, periodically we have experienced difficulty in attracting and retaining qualified engineers and other technical personnel and anticipate that competition for such personnel will increase in the future. For example, the market for qualified technical personnel within India has become extremely competitive, resulting in significant wage inflation. Our recent implementation of various cost-saving measures, as well as past reductions in force, could negatively impact employee morale and potentially make attracting and retaining qualified employees more difficult in the future. As a result, we may not be able to attract and retain key personnel with the skills and expertise necessary to develop new products in the future or to manage our business, both in the United States and abroad.

We have historically used stock options, restricted stock units and our employee stock purchase program as key components of our total employee compensation program in order to align employees’ interests with the interests of our stockholders, encourage retention of key personnel, and provide competitive compensation packages. However, applicable stock exchange listing standards relating to obtaining stockholder approval of equity compensation plans could make it more difficult or expensive for us to grant stock-based awards to employees in the future, which may result in changes in our stock-based compensation strategy. These and other developments relating to the provision of stock-based compensation to employees could make it more difficult to attract, retain and motivate key personnel.

The migration of our customers toward new products could adversely affect our results of operations.

As new or enhanced products are introduced, we must successfully manage the transition from older products in order to minimize the effects of product inventories that may become excess and obsolete, as well as ensure that sufficient supplies of new products can be delivered to meet customer demand. Our failure to manage the transition to newer products in the future or to develop and successfully introduce new products and product enhancements could adversely affect our business or results of operations. In addition, our customers are demanding a higher level of customization for new products, which prevents us from fully leveraging our product design work and adds to our new product development costs. When we introduce new products and product enhancements, we face additional risks relating to product transitions, including risks relating to forecasting demand. Any such adverse event or increased costs could have a material adverse effect on our business, financial condition or results of operations.

Historically, the technology industry has developed higher performance ASICs, which create chip-level solutions that replace selected board-level or box-level solutions at a significantly lower average selling price. We have previously offered ASICs to customers for certain applications that have effectively resulted in a lower-priced solution when compared to an adapter solution. This transition to ASICs may also occur with respect to other current and future products. The result of this transition may have an adverse effect on our business, financial condition or results of operations. In the future, a similar adverse effect to our business could occur if there were rapid shifts in customer purchases from our midrange networking infrastructure products to lower-cost products.

Our business is subject to seasonal fluctuations and uneven sales patterns.

A large percentage of our products are sold to customers who experience seasonality and uneven sales patterns in their businesses. As a result, we experience similar seasonality and uneven sales patterns. We believe this uneven sales pattern is a result of many factors including:

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• the tendency of our customers to close a disproportionate percentage of their sales transactions in the last month, weeks and days of each quarter;

• spikes in sales during the fourth quarter of each calendar year that some of our customers experience; and

• differences between our quarterly fiscal periods and the fiscal periods of our customers.

In addition, because our customers require us to maintain products at hub locations near their facilities, it is difficult for us to predict sales trends. Our uneven sales pattern also makes it extremely difficult to predict the demand of our customers and adjust manufacturing capacity accordingly. If we predict demand that is substantially greater than actual customer orders, we will have excess inventory. Alternatively, if customer orders substantially exceed predicted demand, the ability to assemble, test and ship orders received in the last weeks and days of each quarter may be limited, or at an increased cost, which could have a material adverse effect on quarterly revenues and earnings.

Our distributors may not adequately stock and sell our products and their reseller customers may purchase products from our competitors, which could negatively affect our results of operations.

Our distributors, which typically account for less than 25% of our net revenues, generally offer a diverse array of products from several different manufacturers and suppliers. Accordingly, we are at risk that these distributors may give higher priority to stocking and selling products from other suppliers, thus reducing their efforts and ability to sell our products. A reduction in sales efforts by our current distributors could materially and adversely impact our business or results of operations. In addition, if we decrease our distributor-incentive programs (i.e., competitive pricing and rebates), our distributors may decrease the amount of product purchased from us. This could result in a change of business behavior, and distributors may decide to decrease the amount of product held and reduce their inventory levels, which could impact availability of our products to their customers.

As a result of these factors regarding our distributors or other unrelated factors, the reseller customers of our distributors could decide to purchase products developed and manufactured by our competitors. Any loss of demand for our products by value-added resellers and system integrators could have a material adverse effect on our business or results of operations.

Unanticipated changes in our tax provisions or adverse outcomes resulting from examination of our income tax returns could adversely affect our results of operations.

We are subject to income taxes in the United States and various foreign jurisdictions. Our effective tax rate has been and could in the future be adversely affected by changes in tax laws or interpretations of those tax laws, by changes in the mix of earnings in countries with differing statutory tax rates, or by changes in the valuation of our deferred tax assets and liabilities. Our effective tax rate is also affected by intercompany transactions for licenses, services, funding and other items. Given the global scope of our operations, and the complexity of global tax and transfer pricing rules and regulations, it is difficult to estimate earnings within each tax jurisdiction. If actual earnings within a tax jurisdiction differ materially from our estimates, we may not achieve our expected effective tax rate. Additionally, our effective tax rate may be impacted by the tax effects of acquisitions, dispositions, examinations by tax authorities, stock-based compensation, uncertain tax positions and newly enacted tax legislation. For example, proposed changes to certain U.S. tax rules for U.S. corporations doing business outside the United States include limiting the ability of U.S. corporations to deduct certain expenses attributable to offshore earnings, modifying the foreign tax credit rules and accelerating taxes related to certain transfers of intangible assets offshore. Although the scope of the proposed changes is unclear, it is possible that these or other changes in the U.S. tax laws could increase our effective tax rate and adversely affect our profitability. Finally, we are subject to examination of our income tax returns by the United States Internal Revenue Service (IRS) and other tax authorities, which may result in the assessment of additional income taxes. Our federal consolidated income tax returns for fiscal years 2008 and 2009 are currently under examination by the IRS. We regularly assess the likelihood of adverse outcomes resulting from examinations to determine the adequacy of our provisions for income taxes. However, unanticipated outcomes from examinations could have a material adverse effect on our financial condition or results of operations.

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Because we have operations in foreign countries and depend on foreign customers and suppliers, we are subject to international economic, currency, regulatory, political and other risks that could harm our business, financial condition and results of operations.

International revenues accounted for 55% of our net revenues for the nine months ended January 1, 2012 and December 26, 2010. We expect that international revenues will continue to account for a significant percentage of our net revenues for the foreseeable future. In addition, we maintain operations in foreign countries and a significant portion of our inventory purchases are from suppliers that are located outside the United States. As a result, we are subject to several risks, which include:

• a greater difficulty of administering and managing our business globally;

• compliance with multiple, and potentially conflicting, regulatory requirements, such as import or export requirements, tariffs and other barriers;

• less effective intellectual property protections outside of the United States;

• currency fluctuations;

• overlapping or differing tax structures;

• political and economic instability, including terrorism and war; and

• general trade restrictions.

As of January 1, 2012, our international subsidiaries held $308.7 million of our total cash, cash equivalents and marketable securities. These holdings by our international subsidiaries consist primarily of debt securities due from U.S. issuers, including the U.S. government and related agencies, and U.S. dollar denominated cash and money market funds. Certain foreign regulations could impact our ability to transfer funds to the United States. Additionally, should we decide to repatriate cash held outside of the United States, we may incur a significant tax obligation.

Our international sales are invoiced in U.S. dollars and, accordingly, if the relative value of the U.S. dollar in comparison to the currency of our foreign customers should increase, the resulting effective price increase of our products to such foreign customers could result in decreased sales. In addition, a significant portion of our inventory is purchased from international suppliers, who invoice us in U.S. dollars. If the relative value of the U.S. dollar in comparison to the currency of our foreign suppliers should decrease, our suppliers may increase prices, which could result in a decline of our gross margin. Any of the foregoing factors could have a material adverse effect on our business, financial condition or results of operations.

In addition, we and our customers are subject to various import and export regulations of the United States government and other countries. Certain government export regulations apply to the encryption or other features contained in some of our products. Changes in or violations of any such import or export regulations could materially and adversely affect our business, financial condition or results of operations.

Moreover, in many foreign countries, particularly in those with developing economies, it is common to engage in business practices that are prohibited by regulations applicable to us, such as the Foreign Corrupt Practices Act and other anti-bribery laws. Although we have policies and procedures designed to ensure compliance with these laws, our employees, contractors and agents, as well as those companies to which we outsource certain of our business operations, may take actions in violation of our policies. Any such violation, even if prohibited by our policies, could have a material adverse effect on our business, financial condition or results of operations.

Our facilities and the facilities of our suppliers and customers are located in regions that are subject to natural disasters.

Our California facilities, including our principal executive offices, our principal design facilities and our critical business operations, are located near major earthquake faults. We are not specifically insured for earthquakes or other natural disasters. Any personal injury or damage to the facilities as a result of such occurrences could have a material adverse effect on our business, results of operations or financial condition. Additionally, we have operations, suppliers and customers in regions that have historically experienced natural disasters. Any earthquake or other natural disaster, including a hurricane, flood, volcanic eruption, tsunami or fire, affecting any of these regions could adversely affect our business, results of operations and financial condition.

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Specifically, the earthquake, tsunami and related events that occurred in Japan in March 2011, and the extensive flooding that occurred in Thailand beginning in October 2011, have caused widespread destruction in regions that include suppliers of components for many technology companies. Although we do not source any critical components directly from these regions, we have carefully evaluated the potential impact of these events on our supply chain and have taken proactive steps to mitigate any potential supply risk exposures. While we will continue to closely monitor these situations, we currently do not expect to have any disruptions to our supply chain that would adversely impact our results of operations. In addition, our major customers may face shortages of components that could negatively impact their ability to build the servers and data center devices into which our products are integrated. While none of our major customers have advised us of any supply constraints that would materially impact their purchases of our products, we continue to closely monitor their product demand. If the impact on our supply chain or customer demand as a result of these disasters is significantly different than our current expectations, our business, results of operations and financial condition could be adversely affected.

Our proprietary rights may be inadequately protected and difficult to enforce.

In some jurisdictions, we have patent protection on certain aspects of our technology. However, we rely primarily on trade secrets, trademarks, copyrights and contractual provisions to protect our proprietary rights. There can be no assurance that these protections will be adequate to protect our proprietary rights, that others will not independently develop or otherwise acquire equivalent or superior technology, or that we can maintain such technology as trade secrets. There also can be no assurance that any patents we possess will not be invalidated, circumvented or challenged. We have taken steps in several jurisdictions to enforce our trademarks against third parties. No assurances can be given that we will ultimately be successful in protecting our trademarks. The laws of certain countries in which our products are or may be developed, manufactured or sold, including various countries in Asia, may not protect our products and intellectual property rights to the same extent as the laws of the United States, or at all. If we fail to protect our intellectual property rights, our business could be negatively impacted.

Disputes relating to claimed infringement of intellectual property rights may adversely affect our business.

We have in the past received notices of claimed infringement of intellectual property rights and been involved in intellectual property litigation. There can be no assurance that third parties will not assert future claims of infringement of intellectual property rights against us, or against customers who we are contractually obligated to indemnify, with respect to existing and future products. In addition, our supply of silicon chips and other components can also be interrupted by intellectual property infringement claims against our suppliers.

Individuals and groups are purchasing intellectual property assets for the sole purpose of making claims of infringement and attempting to extract settlements from companies such as ours. Although patent and intellectual property disputes may be settled through licensing or similar arrangements, costs associated with these arrangements may be substantial and the necessary licenses or similar arrangements may not be available to us on satisfactory terms, or at all. As a result, we could be prevented from manufacturing and selling some of our products. In addition, if we litigate these kinds of claims, the litigation could be expensive, time consuming and could divert management’s attention from other matters and there is no guarantee we would prevail. Our business could suffer regardless of the outcome of the litigation.

We may engage in mergers, acquisitions and strategic investments and these activities could adversely affect our results of operations and stock price.

Our future growth may depend in part on our ability to identify and acquire complementary businesses, technologies or product lines that are compatible with our existing business. Mergers and acquisitions involve numerous risks, including:

• the failure of markets for the products of acquired companies to develop as expected;

• uncertainties in identifying and pursuing target companies;

• difficulties in assimilating the operations, technologies and products of the acquired companies;

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• the existence of unknown defects in acquired companies’ products or assets that may not be identified due to the inherent limitations involved in the due diligence process of an acquisition;

• the diversion of management’s attention from other business concerns;

• risks associated with entering markets or conducting operations with which we have no or limited direct prior experience;

• risks associated with assuming the legal obligations of acquired companies;

• risks related to the effect that acquired companies’ internal control processes might have on our financial reporting and management’s report on our internal control over financial reporting;

• the potential loss of, or impairment of our relationships with, current customers or failure to retain the acquired companies’ customers;

• the potential loss of key employees of acquired companies; and

• the incurrence of significant exit charges if products or technologies acquired in business combinations are unsuccessful.

Further, we may never realize the perceived benefits of a business combination. Acquisitions by us could negatively impact gross margins or dilute stockholders’ investment and cause us to incur debt, contingent liabilities and amortization/impairment charges related to intangible assets, all of which could materially and adversely affect our financial position or results of operations. In addition, our effective tax rate for future periods could be negatively impacted by mergers and acquisitions.

We have made, and could make in the future, investments in technology companies, including privately-held companies in a development stage. Many of these private equity investments are inherently risky because the companies’ businesses may never develop, and we may incur losses related to these investments. In addition, we may be required to write down the carrying value of these investments to reflect other-than-temporary declines in their value, which could have a material adverse effect on our financial position and results of operations.

Our portfolio of marketable securities could experience a decline in market value, which could materially and adversely affect our financial results.

As of January 1, 2012, we held short-term marketable securities totaling $321.6 million. We invest in debt securities, the majority of which are high investment grade, and we limit the exposure to credit risk through diversification and investment in highly-rated securities. However, investing in highly-rated securities does not entirely mitigate the risk of potential declines in market value. For example, in the past we have recorded impairment charges related to investment securities, including securities issued by companies in the financial services sector that had previously been rated AA or higher. A deterioration in the economy, including tightening of credit markets or significant volatility in interest rates, could cause declines in value of our marketable securities or could impact the liquidity of the portfolio. If market conditions deteriorate significantly, our results of operations or financial condition could be materially and adversely affected.

Environmental compliance costs could adversely affect our results of operations.

We are subject to various federal, state, local and foreign laws concerning environmental protection, including laws addressing the discharge of pollutants into the environment, the management and disposal of hazardous substances and wastes, the cleanup of contaminated sites, the content of our products and the recycling, treatment and disposal of our products. In particular, we face increasing complexity in our product design and procurement operations as we adjust to new and future requirements relating to the chemical and material composition of our products, their safe use, the energy consumption associated with those products and product take-back legislation (i.e., legislation that makes producers of electrical goods financially responsible for specified collection, recycling, treatment and disposal of past and future covered products). We could incur substantial costs, our products could be restricted from entering certain jurisdictions, and we could face other sanctions, if we were to violate or become liable under environmental laws or if our products become non-compliant with environmental laws. Our potential exposure includes fines and civil or criminal sanctions, third-party property damage or personal injury claims, and clean up costs. Further, liability under some environmental laws relating to contaminated sites can be imposed retroactively, on a joint and several basis, and without any finding of noncompliance or fault. The amount and timing of costs under environmental laws are difficult to predict and could have a material adverse effect on our results of operations.

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Our business could be materially adversely affected by changes in regulations or standards regarding energy use of our products.

We continually seek ways to increase the energy efficiency of our products. Recent analyses have estimated the amount of global carbon emissions that are due to information technology products. As a result, governmental and non-governmental organizations have turned their attention to development of regulations and standards to drive technological improvements and reduce the amount of carbon emissions. There is a risk that these regulations or standards, once developed, will not fully address the complexity of the technology developed by the IT industry or will favor certain technological approaches that we do not currently utilize. Depending on the regulations or standards that are ultimately adopted, compliance could adversely affect our business, results of operations or financial condition.

We may experience difficulties in transitioning to smaller geometry process technologies.

We expect to continue to transition our semiconductor products to increasingly smaller line width geometries. This transition requires us to modify the manufacturing processes for our products and to redesign some products as well as standard cells and other integrated circuit designs that we may use in multiple products. We periodically evaluate the benefits, on a product-by-product basis, of migrating to smaller geometry process technologies. In the past, we have experienced some difficulties in shifting to smaller geometry process technologies or new manufacturing processes, which resulted in reduced manufacturing yields, delays in product deliveries and increased expenses. We may face similar difficulties, delays and expenses as we continue to transition our products to smaller geometry processes.

If we fail to carefully manage the use of “open source” software in our products, we may be required to license key portions of our products on a royalty-free basis or expose key parts of our source code.

Certain of our software may be derived from “open source” software that is generally made available to the public by its authors and/or other third parties. Such open source software is often made available to us under licenses, such as the GNU General Public License (GPL), that impose certain obligations on us in the event we were to distribute derivative works of the open source software. These obligations may require us to make source code for the derivative works available to the public, and/or license such derivative works under a particular type of license, rather than the forms of licenses customarily used to protect our intellectual property. In the event the copyright holder of any open source software were to successfully establish in court that we had not complied with the terms of a license for a particular work, we could be required to release the source code of that work to the public and/or stop distributing that work.

Computer viruses and other forms of tampering with our computer systems or servers may disrupt our operations and adversely affect our business.

Despite our implementation of network security measures and anti-virus defenses, our servers are vulnerable to computer viruses, break-ins and similar disruptions from unauthorized tampering with our computer systems. Any such event could have a material adverse effect on our business, results of operations or financial condition.

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Item 2.     Unregistered Sales of Equity Securities and Use of Proceeds

In August 2010, our Board of Directors approved a program (the August 2010 Program) to repurchase up to $200 million of our common stock over a two-year period. In November 2011, our Board of Directors approved a new program (the November 2011 Program) to repurchase an additional $200 million of our common stock over a two-year period commencing upon the conclusion of the August 2010 program. Set forth below is information regarding our stock repurchases made during the third quarter of fiscal 2012 under these programs.

Period	Total Number of Shares  Purchased		Average Price Paid per  Share		Total Number of Shares  Purchased as Part of Publicly Announced Plan		Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans
October 3, 2011 – October 30, 2011		1,114,900	$	13.44		1,114,900	$	41,399,000
October 31, 2011– November 27, 2011		938,400	$	14.37		938,400	$	227,914,000
November 28, 2011 – January 1, 2012		941,100	$	14.80		941,100	$	213,981,000
		2,994,400	$	14.16		2,994,400	$	213,981,000

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Item 6. Exhibits

Exhibits

Exhibit No.
2.1	Asset Purchase Agreement dated January 20, 2012, by and between QLogic Corporation and Intel Corporation. (incorporated by reference to Exhibit 2.1 of the Registrant’s Current Report on Form 8-K filed on January 25, 2012)†
10.1	Terms and Conditions of Nonqualified Stock Option under the QLogic Corporation 2005 Performance Incentive Plan, Amended and Restated Effective October 31, 2011.*
10.2	Terms and Conditions of Stock Unit Award under the QLogic Corporation 2005 Performance Incentive Plan, Amended and Restated Effective October 31, 2011.*
31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32	Certification of Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended, and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	XBRL Instance Document**
101.SCH	XBRL Taxonomy Extension Schema Document**
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document**
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document**
101.LAB	XBRL Taxonomy Extension Label Linkbase Document**
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document**

† Exhibits and schedules omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company agrees to furnish a supplemental copy of an omitted exhibit or schedule to the SEC upon request.

* Compensation plan, contract or arrangement required to be filed as an exhibit pursuant to applicable rules of the Securities and Exchange Commission.

** XBRL (Extensible Business Reporting Language) information is furnished and not filed herewith, is not a part of a registration statement or Prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

QLOGIC CORPORATION
By:	/s/    SIMON BIDDISCOMBE
	Simon Biddiscombe
	President and
	Chief Executive Officer

By:	/S/    JEAN HU
	Jean Hu
	Senior Vice President and
	Chief Financial Officer
	(Principal Financial and Accounting Officer)

Date: February 2, 2012

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EXHIBIT INDEX

Exhibit No.
2.1	Asset Purchase Agreement dated January 20, 2012, by and between QLogic Corporation and Intel Corporation. (incorporated by reference to Exhibit 2.1 of the Registrant’s Current Report on Form 8-K filed on January 25, 2012)†
10.1	Terms and Conditions of Nonqualified Stock Option under the QLogic Corporation 2005 Performance Incentive Plan, Amended and Restated Effective October 31, 2011.*
10.2	Terms and Conditions of Stock Unit Award under the QLogic Corporation 2005 Performance Incentive Plan, Amended and Restated Effective October 31, 2011.*
31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32	Certification of Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended, and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	XBRL Instance Document**
101.SCH	XBRL Taxonomy Extension Schema Document**
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document**
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document**
101.LAB	XBRL Taxonomy Extension Label Linkbase Document**
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document**

† Exhibits and schedules omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company agrees to furnish a supplemental copy of an omitted exhibit or schedule to the SEC upon request.

* Compensation plan, contract or arrangement required to be filed as an exhibit pursuant to applicable rules of the Securities and Exchange Commission.

** XBRL (Extensible Business Reporting Language) information is furnished and not filed herewith, is not a part of a registration statement or Prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections.

EX-10.1

Exhibit 10.1

QLOGIC CORPORATION

2005 PERFORMANCE INCENTIVE PLAN

TERMS AND CONDITIONS OF NONQUALIFIED STOCK OPTION

1. General.

These Terms and Conditions of Nonqualified Stock Option (these “Terms”) apply to a particular stock option (“Option”) to purchase shares of Common Stock of QLogic Corporation (including its Subsidiaries, the “Corporation”) if incorporated by reference in the Notice of Grant Agreement (“Grant Notice”) corresponding to that particular grant. The recipient of the Option identified in the Grant Notice is referred to as the “Grantee.” The per share exercise price of the Option as set forth on the Grants tab on the CEFS website (www.ubs.com/cefs/qlgc) is referred to as the “Exercise Price.” The effective date of grant of the Option as set forth on the Grants tab on the CEFS website is referred to as the “Award Date.” The Option was granted under and subject to the QLogic Corporation 2005 Performance Incentive Plan (including any applicable sub-plan, the “Plan”) and these Terms. Capitalized terms are defined in the Plan if not defined herein. The Option has been granted to the Grantee in addition to, and not in lieu of, any other form of compensation otherwise payable or to be paid to the Grantee. The Grant Notice and these Terms are collectively referred to as the “Option Agreement” applicable to the Option, or this “Option Agreement.”

2. Vesting; Limits on Exercise; Incentive Stock Option Status.

Subject to adjustment under Section 7.1 of the Plan and further subject to early termination under Section 5 of these Terms and Section 7.4 of the Plan, the Option shall become vested as follows: (1) 25% of the total number of shares of Common Stock subject to the Option shall vest on the first anniversary of the Award Date; and (2) an additional 6.25% of the total number of shares of Common Stock subject to the Option shall vest every three months thereafter until the Option is vested as to all of the shares of Common Stock subject thereto. The Option may be exercised only to the extent the Option is vested and exercisable.

• Cumulative Exercisability. To the extent that the Option is vested and exercisable, the Grantee has the right to exercise the Option (to the extent not previously exercised), and such right shall continue, until the expiration or earlier termination of the Option.

• No Fractional Shares. Fractional share interests shall be disregarded, but may be cumulated.

• Minimum Exercise. No fewer than 100 shares of Common Stock (subject to adjustment under Section 7.1 of the Plan) may be purchased at any one time, unless the number purchased is the total number at the time exercisable under the Option.

• Nonqualified Stock Option. The Option is a nonqualified stock option and is not, and shall not be, an incentive stock option within the meaning of Section 422 of the Code.

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3. Continuance of Employment/Service Required; No Employment/Service Commitment.

The vesting schedule requires continued employment or service through each applicable vesting date as a condition to the vesting of the applicable installment of the Option and the rights and benefits under this Option Agreement. Employment or service for only a portion of the vesting period, even if a substantial portion, will not entitle the Grantee to any proportionate vesting or avoid or mitigate a termination of rights and benefits upon or following a termination of employment or services as provided in Section 5 below or under the Plan.

Nothing contained in this Option Agreement or the Plan constitutes a continued employment or service commitment by the Corporation, affects the Grantee’s status, if he or she is an employee, as an employee at will who is subject to termination without cause, confers upon the Grantee any right to remain employed by or in service to the Corporation, interferes in any way with the right of the Corporation at any time to terminate such employment or service, or affects the right of the Corporation to increase or decrease the Grantee’s other compensation. In jurisdictions that do not recognize an at will employment relationship, the prior sentence is subject to Grantee’s contract of employment and applicable law.

4. Manner of Exercise.

4.1 Method of Exercise of Option.

The Corporation has established a web – based system for managing and exercising Options. Currently, UBS Financial Services, Inc. (“UBS”) manages Option exercises. In order to exercise an Option, the Grantee must contact UBS either by logging on to the UBS OneSource website (http://www.ubs.com/onesource/qlgc) or by calling the UBS Call Center at 1-866-756-4421. UBS will request from the Grantee information regarding the Option to be exercised, the method of payment of the exercise price and the order type. In order to comply with the terms of the Plan, the Grantee also must deliver:

• payment in full for the Exercise Price of the shares to be purchased in cash, check or by electronic funds transfer, or utilizing the UBS same day sale procedures;

• any written statements or agreements required pursuant to Section 8.1 of the Plan; and

• satisfaction of the tax withholding provisions of Section 8.5 of the Plan.

The Administrator also may, but is not required to, authorize a non-cash payment alternative by notice and third party payment in such manner as may be authorized by the Administrator. For other methods of payment for exercise, contact the Administrator.

4.2 Responsibility for Taxes. The ultimate liability for any and all tax, social insurance and payroll tax withholding legally payable by an employee under applicable law (including without limitation laws of foreign jurisdictions)(“Tax-Related Items”) is and remains Grantee’s responsibility and liability and the Corporation (a) makes no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Option, including the grant, vesting or exercise of the Option and the subsequent sale of the shares of Common Stock subject to the Option; and (b) does not commit to structure the terms of the grant or any aspect of the Option to reduce or eliminate Grantee’s liability for Tax-Related Items.

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Prior to exercise of the Option, Grantee shall pay or make adequate arrangements satisfactory to the Administrator to satisfy all withholding obligations of the Corporation. In this regard, Grantee authorizes the Corporation to withhold all applicable Tax-Related Items legally payable by Grantee from his or her wages or other cash compensation paid to Grantee by the Corporation or from proceeds of sale. Alternatively, or in addition, if permissible under local law, the Corporation may sell or arrange for the sale of shares of Common Stock that Grantee is due to acquire to meet the minimum withholding obligations for Tax-Related Items. Finally, Grantee shall pay to the Corporation any amount of any Tax-Related Items that the Corporation may be required to withhold as a result of Grantee’s participation in the Plan or Grantee’s purchase of shares of Common Stock that cannot be satisfied by the means previously described.

5. Early Termination of Option.

5.1 Expiration Date. Subject to earlier termination as provided below in this Section 5, the Option will terminate ten years after the Award Date, including the Award Date (the “Expiration Date”). For example, if an Option is awarded on February 15, 2010, assuming no earlier termination as set forth in this Section 5, the Option will terminate at the close of business on February 14, 2020.

5.2 Possible Termination of Option upon Change in Control. The Option is subject to termination in connection with a Change in Control Event or certain similar reorganization events as provided in Section 7.4 of the Plan.

5.3 Termination of Option upon a Termination of Grantee’s Employment or Services. Subject to earlier termination on the Expiration Date of the Option or pursuant to Section 5.2 above, if the Grantee ceases to be employed by or ceases to provide services to the Corporation, the following rules shall apply (the last day that the Grantee is employed by or provides services to the Corporation is referred to as the Grantee’s “Severance Date”):

• other than as expressly provided below in this Section 5.3, (a) the Grantee will have until the date that is 3 months after his or her Severance Date (including the Severance Date) to exercise the Option (or portion thereof) to the extent that it was vested on the Severance Date (e.g. – if the Severance Date as February 15, 2010, the three-month period would expire at the close of business on May 14, 2010), (b) the Option, to the extent not vested on the Severance Date, shall terminate on the Severance Date, and (c) the Option, to the extent exercisable for the 3-month period following the Severance Date and not exercised during such period, shall terminate at the close of business on the last day of the 3-month period;

• if the termination of the Grantee’s employment or services is the result of the Grantee’s death or Total Disability (as defined below), (a) the Grantee (or his or her beneficiary or personal representative, as the case may be) will have until the date that is 12 months after the Grantee’s Severance Date (including the Severance Date)

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to exercise the Option (e.g. – if the Severance Date as February 15, 2010, the 12-month period would expire at the close of business on February14, 2011), (b) the Option, to the extent not vested on the Severance Date, shall terminate on the Severance Date, and (c) the Option, to the extent exercisable for the 12-month period following the Severance Date and not exercised during such period, shall terminate at the close of business on the last day of the 12-month period;

• if the Grantee’s employment or services are terminated by the Corporation for Cause (as defined below), the Option (whether vested or not) shall terminate on the Severance Date.

For purposes of the Option, “Total Disability” means a “permanent and total disability” (within the meaning of Section 22(e)(3) of the Code or as otherwise determined by the Administrator).

For purposes of the Option, “Cause” means that the Grantee:

(1) has been negligent in the discharge of his or her duties to the Corporation, has refused to perform stated or assigned duties or is incompetent in or (other than by reason of a disability or analogous condition) incapable of performing those duties;

(2) has been dishonest or committed or engaged in an act of theft, embezzlement or fraud, a breach of confidentiality, an unauthorized disclosure or use of inside information, customer lists, trade secrets or other confidential information; has breached a fiduciary duty, or willfully and materially violated any other duty, law, rule, regulation or policy of the Corporation or any affiliate of the Corporation; or has been convicted of a felony or misdemeanor (other than minor traffic violations or similar offenses);

(3) has materially breached any of the provisions of any agreement with the Corporation or any affiliate of the Corporation; or

(4) has engaged in unfair competition with, or otherwise acted intentionally in a manner injurious to the reputation, business or assets of, the Corporation or any affiliate of the Corporation; has improperly induced a vendor or customer to break or terminate any contract with the Corporation or any affiliate of the Corporation; or has induced a principal for whom the Corporation or any affiliate of the Corporation acts as agent to terminate such agency relationship.

In all events the Option is subject to earlier termination on the Expiration Date of the Option or as contemplated by Section 5.2. The Administrator shall be the sole judge of whether the Grantee continues to render employment or services for purposes of this Option Agreement. In addition to the circumstances set out in Section 6.2 of the Plan, the employment relationship shall not be considered terminated in the case of any statutory leave.

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6. Non-Transferability.

The Option and any other rights of the Grantee under this Option Agreement or the Plan are nontransferable and exercisable only by the Grantee, except as set forth in Section 5.7 of the Plan and subject to applicable law.

7. Adjustment.

The total number of shares of Common Stock subject to the Option, as well as the Exercise Price of the Option, are subject to adjustment pursuant to Section 7.1 of the Plan.

8. Data Privacy Consent.

Grantee explicitly and unambiguously consents to the collection, use, transfer and processing, in electronic or other form, of Grantee’s personal data as described in this document by and among, as applicable, the Corporation or its affiliates (or their agents) for the exclusive purpose of implementing, administering and managing Grantee’s participation in the Plan.

Grantee further understands that the Corporation or its affiliates (or their agents) hold certain personal information about Grantee, including, but not limited to, Grantee’s name, home address and telephone number, date of birth, social insurance number or other identification number, salary, nationality, job title, any shares of stock held in the Corporation and details of all Options or other entitlements to shares of Common Stock awarded, canceled, exercised, vested, unvested or outstanding in Grantee’s favor, for the purpose of implementing, administering and managing the Plan (“Data”). Grantee understands that Data may be transferred to any third parties assisting in the implementation, administration and management of the Plan, that these recipients may be located in Grantee’s country, or elsewhere, and that the recipient’s country may not have the same level of data privacy laws and protections as Grantee’s country. Grantee authorizes the recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, for the purposes of implementing, administering and managing Grantee’s participation in the Plan, including any requisite transfer of such Data as may be required to a broker or other third party with whom Grantee may elect to deposit any shares of Common Stock acquired upon exercise of the Option. Grantee understands that Data will be held only as long as is necessary to implement, administer and manage Grantee’s participation in the Plan. Grantee understands that he or she may, at any time, view Data, request additional information about the storage and processing of Data, require any necessary amendments to Data or withdraw the consents herein by contacting the Corporation’s human resources department. Grantee understands that withdrawal of consent may affect Grantee’s ability to exercise or realize benefits from the Option.

9. Nature of Grant.

In accepting the grant of the Option, Grantee acknowledges that: (i) the Plan is established voluntarily by the Corporation, it is discretionary in nature and it may be modified, suspended or terminated by the Corporation at any time, as provided in the Plan and these Terms; (ii) the grant of the Option is voluntary and occasional and does not create any contractual or other right to receive future grants of stock options, or benefits in lieu of stock options even if stock options have been granted repeatedly in the past; (iii) all decisions with

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respect to future grants will be at the sole discretion of the Corporation; (iv) Grantee’s participation in the Plan shall not create a right to further employment and shall not interfere with the ability of the Corporation to terminate Grantee’s employment relationship at any time with or without cause (subject to Grantee’s contract of employment, if one exists, and applicable law); (v) Grantee’s participation in the Plan is voluntary; (vi) in the event that Grantee is not an employee of the Corporation, the Option grant will not be interpreted to form an employment contract or relationship with the Corporation, and furthermore, the Option grant will not be interpreted to form an employment contract with the Corporation and any of its affiliates; (vii) the future value of the underlying shares of Common Stock is unknown and cannot be predicted with certainty; (viii) if the underlying shares of Common Stock do not increase in value, the Option will have no value; (ix) if Grantee exercises his or her Option and obtains shares of Common Stock, the value of those shares of Common Stock acquired upon exercise may increase or decrease in value, even below the Exercise Price; and (x) no claim or entitlement to compensation or damages arises from termination of the Option or diminution in value of the Option or shares of Common Stock acquired pursuant to the Option whether such compensation is claimed by way of damages for wrongful dismissal or other breach of contract or by way of compensation for loss of office or employment or otherwise howsoever. Grantee irrevocably releases the Corporation and its affiliates from any such claim that may arise and Grantee shall not be entitled to any compensation or damages whatsoever or however described by reason of any termination, withdrawal or alteration of rights or expectations under the Plan.

10. Clawback Policy.

Notwithstanding anything else contained herein or in the Plan to the contrary, but subject to applicable law, this Option Agreement is subject to the Company’s clawback policy, as well as the “clawback” provisions of applicable law, rules and regulations, as each may be adopted and in effect from time to time (collectively, the “Clawback Policy”). The provisions of the Clawback Policy are in addition to (and not in lieu of) any rights to repayment the Company may have under Section 304 of the Sarbanes-Oxley Act of 2002 and other applicable laws.

11. Notices.

Any notice to be given under the terms of this Option Agreement shall be in writing and addressed to the Corporation at its principal office to the attention of the Secretary, and to the Grantee at the address last reflected on the Corporation’s payroll records or at Grantee’s place of work, or at such other address as either party may hereafter designate in writing to the other. Any such notice shall be delivered in person or by pre-paid post/mail shall be enclosed in a properly sealed envelope addressed as aforesaid. Any such notice shall be given only when received, but if the Grantee is no longer employed by the Corporation, shall be deemed to have been duly given five business days after the date posted/mailed in accordance with the foregoing provisions of this Section 11.

12. Plan.

The Option and all rights of the Grantee under this Option Agreement are subject to the terms and conditions of the Plan, incorporated herein by this reference. The Grantee agrees to be bound by the terms of the Plan and this Option Agreement. The Grantee acknowledges having

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read and understanding the Plan and this Option Agreement. Unless otherwise expressly provided in other sections of this Option Agreement, provisions of the Plan that confer discretionary authority on the Board or the Administrator do not and shall not be deemed to create any rights in the Grantee unless such rights are expressly set forth herein or are otherwise in the sole discretion of the Board or the Administrator so conferred by appropriate action of the Board or the Administrator under the Plan after the date hereof.

13. Entire Agreement.

This Option Agreement and the Plan together constitute the entire agreement and supersede all prior understandings and agreements, written or oral, of the parties hereto with respect to the subject matter hereof. The Plan and this Option Agreement may be amended pursuant to Section 8.6 of the Plan. Such amendment must be in writing and signed by the Corporation. The Corporation may, however, unilaterally waive any provision hereof in writing to the extent such waiver does not adversely affect the interests of the Grantee hereunder, but no such waiver shall operate as or be construed to be a subsequent waiver of the same provision or a waiver of any other provision hereof.

14. Governing Law.

This Option Agreement shall be governed by and construed and enforced and executed in accordance with the laws of the State of Delaware without regard to conflict of law principles thereunder.

15. Effect of this Agreement.

Subject to the Corporation’s right to terminate the Option pursuant to Section 7.4 of the Plan, this Option Agreement shall be assumed by, be binding upon and inure to the benefit of any successor or successors to the Corporation.

16. Section Headings.

The section headings of this Option Agreement are for convenience of reference only and shall not be deemed to alter or affect any provision hereof.

17. Acceptance.

In accepting the grant of the Option, Grantee acknowledges receipt of a copy of the Plan, the Grant Notice and these Terms. Grantee has read and understands the terms and provisions thereof, and has accepted the Option subject to all terms and conditions of the Plan, the Grant Notice and these Terms. Grantee acknowledges that there may be adverse tax consequences upon exercise of the Option or disposition of the shares of Common Stock acquired upon exercise and that Grantee should consult a tax adviser prior to such exercise or disposition.

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EX-10.2

Exhibit 10.2

QLOGIC CORPORATION

2005 PERFORMANCE INCENTIVE PLAN

TERMS AND CONDITIONS OF STOCK UNIT AWARD

1. General.

Subject to these Terms and Conditions of Stock Unit Award (these “Terms”) and the QLogic Corporation 2005 Performance Incentive Plan (including any applicable sub-plan, the “Plan”), QLogic Corporation (including its Subsidiaries, the “Corporation”) has granted to the Grantee (as defined below) a credit of stock units under the Plan (the “Stock Unit Award” or “Award”) with respect to the number of stock units provided in the Notice of Grant Agreement (“Grant Notice”) corresponding to that particular Award grant (subject to adjustment as provided in Section 7.1 of the Plan) (the “Stock Units”). As used herein, the term “stock unit” means a non-voting unit of measurement which is deemed for bookkeeping purposes to be equivalent to one outstanding share of QLogic Corporation’s Common Stock (subject to adjustment as provided in Section 7.1 of the Plan) solely for purposes of the Plan and these Terms. The recipient of the Award identified in the Grant Notice is referred to as the “Grantee.” The effective date of grant of the Award as set forth on the Grants tab on the CEFS website (www.ubs.com/cefs/qlgc) is referred to as the “Award Date.” Capitalized terms are defined in the Plan if not defined herein. The Award has been granted to the Grantee in addition to, and not in lieu of, any other form of compensation otherwise payable or to be paid to the Grantee. The Stock Units shall be used solely as a device for the determination of the payment to eventually be made to the Participant if such Stock Units vest pursuant to Section 2. The Stock Units shall not be treated as property or as a trust fund of any kind.

The Grant Notice and these Terms are collectively referred to as the “Stock Unit Award Agreement” applicable to the Stock Units, or this “Stock Unit Award Agreement.”

2. Vesting.

Subject to adjustment under Section 7.1 of the Plan and further subject to early termination under Section 6 of these Terms, the Award shall vest and become non-forfeitable with respect to twenty-five (25%) of the total number of Stock Units on each of the first, second, third and fourth anniversaries of the Award Date.

3. Continuance of Employment/Service Required; No Employment/Service Commitment.

The vesting schedule requires continued employment or service through each applicable vesting date as a condition to the vesting of the applicable installment of the Award and the rights and benefits under this Stock Unit Award Agreement. Employment or service for only a portion of the vesting period, even if a substantial portion, will not entitle the Grantee to any proportionate vesting or avoid or mitigate a termination of rights and benefits upon or following a termination of employment or services as provided in Section 6 below or under the Plan.

Nothing contained in this Stock Unit Award Agreement or the Plan constitutes a continued employment or service commitment by the Corporation, affects the Grantee’s status, if he or she is an employee, as an employee at will who is subject to termination without cause,

1

confers upon the Grantee any right to remain employed by or in service to the Corporation, interferes in any way with the right of the Corporation at any time to terminate such employment or service, or affects the right of the Corporation to increase or decrease the Grantee’s other compensation. In jurisdictions that do not recognize an at will employment relationship, the prior sentence is subject to Grantee’s contract of employment and applicable law.

4. Dividend and Voting Rights.

The Grantee shall have no rights as a stockholder of the Corporation, no dividend rights and no voting rights with respect to the Stock Units and any shares of Common Stock underlying or issuable in respect of such Stock Units until such shares of Common Stock are actually issued to and held of record by the Grantee. No adjustments will be made for dividends or other rights of a holder for which the record date is prior to the date of issuance of the stock certificate.

5. Crediting of Vested Stock Unit Awards; Tax Withholding.

5.1 Crediting of Vested Stock Unit Awards.

On or as soon as administratively practical following each vesting of the applicable portion of the total Award pursuant to Section 2 (and in all events not later than two and one-half months after the vesting date), the Corporation shall deliver to the Grantee a number of shares of Common Stock (either by delivering one or more certificates for such shares or by entering such shares in book entry form, as determined by the Corporation in its discretion) equal to the number of Stock Units subject to this Award that vest on the applicable vesting date, unless such Stock Units terminate prior to the given vesting date pursuant to Section 6. The Corporation’s obligation to deliver or credit shares of Common Stock with respect to vested Stock Units is subject to the condition precedent that the Grantee or other person entitled under the Plan to receive any shares with respect to the vested Stock Units (a) deliver to the Corporation any representations or other documents or assurances required pursuant to Section 8.1 of the Plan and (b) make arrangements satisfactory to the Corporation to pay or otherwise satisfy the tax withholding requirements with respect to the vested Stock Units. The Grantee shall have no further rights with respect to any Stock Units that are paid or that terminate pursuant to Section 6.

The Corporation has established a web – based system for managing Stock Unit Awards. Currently, UBS Financial Services, Inc. (“UBS”) manages Stock Unit Awards. In the event that the Grantee wishes to sell shares of Common Stock granted pursuant to a vested Stock Unit Award, the Grantee must contact UBS either by logging on to the UBS OneSource website (http://www.ubs.com/onesource/qlgc) or by calling the UBS Call Center at 1-866-756-4421. UBS will request from the Grantee information regarding the Common Stock to be sold and the order type.

5.2 Responsibility for Taxes. The ultimate liability for any and all tax, social insurance and payroll tax withholding legally payable by an employee under applicable law (including without limitation laws of foreign jurisdictions)(“Tax-Related Items”) is and remains Grantee’s responsibility and liability and the Corporation (a) makes no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of

2

the Award, including the grant or vesting of the Award and the subsequent sale of the shares of Common Stock subject to the Award; and (b) does not commit to structure the terms of the grant or any aspect of the Award to reduce or eliminate Grantee’s liability for Tax-Related Items.

Upon the granting of a Stock Unit Awards or the vesting of shares of the Common Stock in respect of the Stock Unit Awards, the Corporation shall have the right at its option to (a) require the Grantee to pay or provide for payment in cash of the amount of any taxes that the Corporation may be required to withhold with respect to such payment and/or distribution, or (b) deduct from any amount payable to the Grantee the amount of any taxes which the Corporation may be required to withhold with respect to such payment and/or distribution. In any case where a tax is required to be withheld in connection with Stock Unit Awards or the delivery of shares of Common Stock under this Stock Unit Award Agreement, the Administrator may, in its sole discretion, direct the Corporation to reduce the number of Stock Unit Awards or shares to be delivered by (or otherwise reacquire) the appropriate number of whole shares, valued at their then fair market value (with the “fair market value” of such shares determined in accordance with the applicable provisions of the Plan), to satisfy such withholding obligation at the minimum applicable withholding rates. Alternatively, or in addition, if permissible under local law, the Corporation may sell or arrange for the sale of shares of Common Stock that Grantee is due to acquire to meet the minimum withholding obligations for Tax-Related Items. Finally, Grantee shall pay to the Corporation any amount of any Tax-Related Items that the Corporation may be required to withhold as a result of Grantee’s participation in the Plan or Grantee’s purchase of shares of Common Stock that cannot be satisfied by the means previously described.

6. Early Termination of Award.

The Grantee’s Stock Units shall terminate to the extent such units have not become vested prior to the first date the Grantee is no longer employed by the Corporation, regardless of the reason for the termination of the Grantee’s employment with the Corporation, whether with or without cause, voluntarily or involuntarily. If the Grantee is employed by a Subsidiary and that entity ceases to be a Subsidiary, such event shall be deemed to be a termination of employment of the Grantee for purposes of this Agreement, unless the Grantee otherwise continues to be employed by the Corporation or another of its Subsidiaries following such event. If any unvested Stock Units are terminated hereunder, such Stock Units shall automatically terminate and be cancelled as of the applicable termination date without payment of any consideration by the Corporation and without any other action by the Grantee, or the Grantee’s beneficiary or personal representative, as the case may be. The Administrator shall be the sole judge of whether the Grantee continues to render employment or services for purposes of this Stock Unit Award Agreement; provided, that the employment relationship shall not be considered terminated in the case of any statutory leave.

7. Restrictions on Transfer.

Subject to applicable law, neither the Stock Unit Award, nor any interest therein or amount or shares payable in respect thereof may be sold, assigned, transferred, pledged or otherwise disposed of, alienated or encumbered, either voluntarily or involuntarily. The transfer restrictions in the preceding sentence shall not apply to (a) transfers to the Corporation, or (b) transfers by will or the laws of descent and distribution.

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8. Adjustment.

Upon the occurrence of certain events relating to the Corporation’s stock contemplated by Section 7.1 of the Plan, the Administrator shall make adjustments if appropriate in the number of Stock Units then outstanding and the number and kind of securities that may be issued in respect of the Stock Unit Award.

9. Data Privacy Consent.

Grantee explicitly and unambiguously consents to the collection, use, transfer and processing, in electronic or other form, of Grantee’s personal data as described in this document by and among, as applicable, the Corporation or its affiliates (or their agents) for the exclusive purpose of implementing, administering and managing Grantee’s participation in the Plan.

Grantee further understands that the Corporation or its affiliates (or their agents) hold certain personal information about Grantee, including, but not limited to, Grantee’s name, home address and telephone number, date of birth, social insurance number or other identification number, salary, nationality, job title, any shares of stock held in the Corporation and details of all Awards or other entitlements to shares of Common Stock awarded, canceled, exercised, vested, unvested or outstanding in Grantee’s favor, for the purpose of implementing, administering and managing the Plan (“Data”). Grantee understands that Data may be transferred to any third parties assisting in the implementation, administration and management of the Plan, that these recipients may be located in Grantee’s country, or elsewhere, and that the recipient’s country may not have the same level of data privacy laws and protections as Grantee’s country. Grantee authorizes the recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, for the purposes of implementing, administering and managing Grantee’s participation in the Plan, including any requisite transfer of such Data as may be required to a broker or other third party with whom Grantee may elect to deposit any shares of Common Stock acquired upon vesting of the Award. Grantee understands that Data will be held only as long as is necessary to implement, administer and manage Grantee’s participation in the Plan. Grantee understands that he or she may, at any time, view Data, request additional information about the storage and processing of Data, require any necessary amendments to Data or withdraw the consents herein by contacting the Corporation’s human resources department. Grantee understands that withdrawal of consent may affect Grantee’s ability to exercise or realize benefits from the Award.

10. Nature of Grant.

In accepting the grant of the Award, Grantee acknowledges that: (i) the Plan is established voluntarily by the Corporation, it is discretionary in nature and it may be modified, suspended or terminated by the Corporation at any time, as provided in the Plan and these Terms; (ii) the grant of the Award is voluntary and occasional and does not create any contractual or other right to receive future grants of stock units, or benefits in lieu of stock units even if stock units have been granted repeatedly in the past; (iii) all decisions with respect to future grants will be at the sole discretion of the Corporation; (iv) Grantee’s participation in the Plan shall not create a right to further employment and shall not interfere with the ability of the Corporation to terminate Grantee’s employment relationship at any time with or without cause

4

(subject to Grantee’s contract of employment, if on exists, and applicable law); (v) Grantee’s participation in the Plan is voluntary; (vi) in the event that Grantee is not an employee of the Corporation, the Award grant will not be interpreted to form an employment contract or relationship with the Corporation, and furthermore, the Award grant will not be interpreted to form an employment contract with the Corporation and any of its affiliates; (vii) the future value of the underlying shares of Common Stock is unknown and cannot be predicted with certainty; (viii) if Grantee vests in his or her Award and shares of Common Stock are no longer restricted, the value of those shares of Common Stock acquired upon vesting may increase or decrease in value, even below the price at which such Award was originally granted; and (ix) no claim or entitlement to compensation or damages arises from termination of the Award or diminution in value of the Award or shares of Common Stock acquired pursuant to the Award whether such compensation is claimed by way of damages for wrongful dismissal or other breach of contract or by way of compensation for loss of office or employment or otherwise howsoever. Grantee irrevocably releases the Corporation and its affiliates from any such claim that may arise and Grantee shall not be entitled to any compensation or damages whatsoever or however described by reason of any termination, withdrawal or alteration of rights or expectations under the Plan.

11. Clawback Policy.

Notwithstanding anything else contained herein or in the Plan to the contrary, but subject to applicable law, this Option Agreement is subject to the Company’s clawback policy, as well as the “clawback” provisions of applicable law, rules and regulations, as each may be adopted and in effect from time to time (collectively, the “Clawback Policy”). The provisions of the Clawback Policy are in addition to (and not in lieu of) any rights to repayment the Company may have under Section 304 of the Sarbanes-Oxley Act of 2002 and other applicable laws.

12. Notices.

Any notice to be given under the terms of this Stock Unit Award Agreement shall be in writing and addressed to the Corporation at its principal office to the attention of the Secretary, and to the Grantee at the address last reflected on the Corporation’s payroll records or at Grantee’s place of work, or at such other address as either party may hereafter designate in writing to the other. Any such notice shall be delivered in person or by pre-paid post/mail shall be enclosed in a properly sealed envelope addressed as aforesaid. Any such notice shall be given only when received, but if the Grantee is no longer employed by the Corporation , shall be deemed to have been duly given five business days after the date posted/mailed in accordance with the foregoing provisions of this Section 12.

13. Plan.

The Award and all rights of the Grantee under this Stock Unit Award Agreement are subject to the terms and conditions of the Plan, incorporated herein by this reference. The Grantee agrees to be bound by the terms of the Plan and this Stock Unit Award Agreement. The Grantee acknowledges having read and understanding the Plan and this Stock Unit Award Agreement. Unless otherwise expressly provided in other sections of this Stock Unit Award Agreement, provisions of the Plan that confer discretionary authority on the Board or the Administrator do not and shall not be deemed to create any rights in the Grantee unless such rights are expressly set forth herein or are otherwise in the sole discretion of the Board or the Administrator so conferred by appropriate action of the Board or the Administrator under the Plan after the date hereof.

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14. Entire Agreement.

This Stock Unit Award Agreement and the Plan together constitute the entire agreement and supersede all prior understandings and agreements, written or oral, of the parties hereto with respect to the subject matter hereof. The Plan and this Stock Unit Award Agreement may be amended pursuant to Section 8.6 of the Plan. Such amendment must be in writing and signed by the Corporation. The Corporation may, however, unilaterally waive any provision hereof in writing to the extent such waiver does not adversely affect the interests of the Grantee hereunder, but no such waiver shall operate as or be construed to be a subsequent waiver of the same provision or a waiver of any other provision hereof.

15. Governing Law.

This Stock Unit Award Agreement shall be governed by and construed and enforced and executed in accordance with the laws of the State of Delaware without regard to conflict of law principles thereunder.

16. Effect of this Agreement.

Subject to the Corporation’s right to terminate the Award pursuant to Section 7.4 of the Plan, this Stock Unit Award Agreement shall be assumed by, be binding upon and inure to the benefit of any successor or successors to the Corporation.

17. Limitation on Participant’s Rights.

Participation in the Plan confers no rights or interests other than as herein provided. This Stock Unit Award Agreement creates only a contractual obligation on the part of the Corporation as to amounts payable and shall not be construed as creating a trust. Neither the Plan nor any underlying program, in and of itself, has any assets. The Grantee shall have only the rights of a general unsecured creditor of the Corporation with respect to amounts credited and benefits payable, if any, with respect to the Stock Units, and rights no greater than the right to receive the Common Stock as a general unsecured creditor with respect to Stock Units, as and when payable hereunder.

18. Section Headings.

The section headings of this Stock Unit Award Agreement are for convenience of reference only and shall not be deemed to alter or affect any provision hereof.

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19. Construction.

It is intended that the terms of the Award will not result in the imposition of any tax liability pursuant to Section 409A of the Code. The Stock Unit Award Agreement shall be construed and interpreted consistent with that intent.

20. Acceptance.

In accepting the grant of the Award, Grantee acknowledges receipt of a copy of the Plan, the Grant Notice and these Terms. Grantee has read and understands the terms and provisions thereof, and has accepted the Award subject to all terms and conditions of the Plan, the Grant Notice and these Terms. Grantee acknowledges that there may be adverse tax consequences upon vesting of the Award or disposition of the shares of Common Stock acquired upon vesting of the Award and that Grantee should consult a tax adviser prior to such exercise or disposition.

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EX-31.1

EXHIBIT 31.1

Certification pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934,

as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Simon Biddiscombe, certify that:

1. I have reviewed this quarterly report on Form 10-Q of QLogic Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

By:	/s/    SIMON BIDDISCOMBE
	Simon Biddiscombe
	Chief Executive Officer

Date: February 2, 2012

EX-31.2

EXHIBIT 31.2

Certification pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934,

as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Jean Hu, certify that:

1. I have reviewed this quarterly report on Form 10-Q of QLogic Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

By:	/S/    JEAN HU
	Jean Hu
	Chief Financial Officer

Date: February 2, 2012

EX-32

EXHIBIT 32

Certification pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934,

as amended, and 18 U.S.C. Section 1350, as adopted pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

Each of the undersigned, the Chief Executive Officer and Chief Financial Officer of QLogic Corporation (the “Company”), hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) the Quarterly Report on Form 10-Q of the Company for the quarter ended January 1, 2012 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ SIMON BIDDISCOMBE

Simon Biddiscombe

Chief Executive Officer

/S/ JEAN HU

Jean Hu

Chief Financial Officer

Dated: February 2, 2012

The foregoing certification is being furnished to the Securities and Exchange Commission pursuant to 18 U.S.C. Section 1350. It is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and it is not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, except to the extent that the Company specifically incorporates it by reference and regardless of any general incorporation language in such filing.

XML

Net Income Per Share (Details Textual) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Jan. 01, 2012	Dec. 26, 2010	Jan. 01, 2012	Dec. 26, 2010
Net Income Per Share (Textual) [Abstract]
Stock-based awards excluded from the diluted net income per share	19.2	13.3	18.2	15.1

XML

Marketable Securities (Details 2) (USD $) In Thousands, unless otherwise specified	Jan. 01, 2012	Apr. 03, 2011
Schedule of Unrealized Losses by Investment Category
Fair value of less than 12 months	$ 131,166	$ 96,164
Unrealized losses of less than 12 months	(631)	(560)
Fair Value of 12 months or greater	327	0
Unrealized losses of 12 months or Greater	(2)	0
Fair value, Total	131,493	96,164
Unrealized losses, Total	(633)	(560)
U.S. Government and agency securities [Member]
Schedule of Unrealized Losses by Investment Category
Fair value of less than 12 months	48,183	25,712
Unrealized losses of less than 12 months	(27)	(216)
Fair Value of 12 months or greater	0	0
Unrealized losses of 12 months or Greater	0	0
Fair value, Total	48,183	25,712
Unrealized losses, Total	(27)	(216)
Corporate debt obligations [Member]
Schedule of Unrealized Losses by Investment Category
Fair value of less than 12 months	65,975	60,595
Unrealized losses of less than 12 months	(529)	(282)
Fair Value of 12 months or greater	327	0
Unrealized losses of 12 months or Greater	(2)	0
Fair value, Total	66,302	60,595
Unrealized losses, Total	(531)	(282)
Asset and mortgage-backed securities [Member]
Schedule of Unrealized Losses by Investment Category
Fair value of less than 12 months	14,935	7,991
Unrealized losses of less than 12 months	(73)	(52)
Fair Value of 12 months or greater	0	0
Unrealized losses of 12 months or Greater	0	0
Fair value, Total	14,935	7,991
Unrealized losses, Total	(73)	(52)
Municipal bonds [Member]
Schedule of Unrealized Losses by Investment Category
Fair value of less than 12 months	2,073	1,866
Unrealized losses of less than 12 months	(2)	(10)
Fair Value of 12 months or greater	0	0
Unrealized losses of 12 months or Greater	0	0
Fair value, Total	2,073	1,866
Unrealized losses, Total	$ (2)	$ (10)

XML

Inventories

9 Months Ended

Jan. 01, 2012

Inventories [Abstract]

Inventories

Note 4. Inventories

Components of inventories are as follows:

	January 1, 2012		April 3, 2011
	(In thousands)
Raw materials	$	6,669	$	5,702
Finished goods		20,298		21,229
	$	26,967	$	26,931

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Stock-Based Compensation (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Jan. 01, 2012	Dec. 26, 2010	Jan. 01, 2012	Dec. 26, 2010
Summary of stock-based compensation expense
Stock-based compensation expense	$ 8,100	$ 8,519	$ 25,787	$ 27,111
Cost of Revenues [Member]
Summary of stock-based compensation expense
Stock-based compensation expense	632	599	2,075	1,962
Engineering and Development [Member]
Summary of stock-based compensation expense
Stock-based compensation expense	3,553	3,714	11,776	12,692
Sales and Marketing [Member]
Summary of stock-based compensation expense
Stock-based compensation expense	1,924	1,824	5,625	5,866
General and Administrative [Member]
Summary of stock-based compensation expense
Stock-based compensation expense	$ 1,991	$ 2,382	$ 6,311	$ 6,591

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Treasury Stock (Details) (USD $) In Millions, unless otherwise specified	1 Months Ended	108 Months Ended
	Nov. 30, 2011 Year	Jan. 01, 2012
Treasury Stock (Textual) [Abstract]
Period of repurchase of common stock	2
Amount authorized for repurchasing common stock	$ 200	$ 1,950

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Stock-Based Compensation (Details Textual) (USD $) In Millions, except Per Share data, unless otherwise specified	9 Months Ended
	Jan. 01, 2012
Stock-Based Compensation (Textual) [Abstract]
Stock options granted, shares	1.6
Weighted average grant date fair values per share, options granted for purchase of common stock	$ 5.73
Weighted average grant date fair values per share, restricted stock units granted	$ 15.55
Restricted Stock Units (RSUs) [Member]
Stock-Based Compensation (Textual) [Abstract]
Restricted stock units granted, shares	1.6
Restricted Stock Units with Performance Conditions [Member]
Stock-Based Compensation (Textual) [Abstract]
Restricted stock units granted, shares	0.2

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Income Taxes (Details Textual) (USD $)	3 Months Ended		9 Months Ended
	Jan. 01, 2012	Dec. 26, 2010	Jan. 01, 2012	Dec. 26, 2010
Income Taxes (Textual) [Abstract]
Provision for income taxes	$ 4,179,000	$ (9,107,000)	$ 9,789,000	$ 2,188,000
Effective income tax rate			10.00%	2.00%
Specific income tax benefits related to the expiration of certain statutes of limitation		$ 14,600,000

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Fair Value Measurements

9 Months Ended

Jan. 01, 2012

Fair Value Measurements [Abstract]

Fair Value Measurements

Note 3. Fair Value Measurements

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The fair value hierarchy is based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value. A description of the three levels of inputs is as follows:

• Level 1 – Quoted prices in active markets for identical assets or liabilities.

• Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

• Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Assets measured at fair value on a recurring basis as of January 1, 2012 and April 3, 2011 are as follows:

	Fair Value Measurements Using
	Level 1		Level 2		Level 3		Total
January 1, 2012	(In thousands)
Cash and cash equivalents	$	70,189	$	4,009	$	—	$	74,198
Marketable securities:
U.S. government and agency securities		121,718		—		—		121,718
Corporate debt obligations		—		144,869		—		144,869
Asset and mortgage-backed securities		—		39,040		—		39,040
Municipal bonds		—		15,808		—		15,808
Certificates of deposit		192		—		—		192
		121,910		199,717		—		321,627
	$	192,099	$	203,726	$	—	$	395,825
April 3, 2011
Cash and cash equivalents	$	146,281	$	1,499	$	—	$	147,780
Marketable securities:
U.S. government and agency securities		55,753		—		—		55,753
Corporate debt obligations		—		138,436		—		138,436
Asset and mortgage-backed securities		—		22,490		—		22,490
Municipal bonds		—		17,941		—		17,941
Non-U.S. government and agency securities		—		1,676		—		1,676
		55,753		180,543		—		236,296
	$	202,034	$	182,042	$	—	$	384,076

The Company’s investments classified within Level 2 were primarily valued based on valuations obtained from a third-party pricing service. To estimate fair value, the pricing service utilizes industry standard valuation models, including both income and market-based approaches for which all significant inputs are observable either directly or indirectly. These inputs include reported trades and broker/dealer quotes of the same or similar securities, issuer credit spreads, benchmark securities and other observable inputs.

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Net Income Per Share (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Jan. 01, 2012	Dec. 26, 2010	Jan. 01, 2012	Dec. 26, 2010
Net Income Per Share [Abstract]
Net income	$ 30,025	$ 50,339	$ 91,105	$ 105,774
Shares:
Weighted-average shares outstanding - basic	100,135	105,830	102,696	108,492
Dilutive potential common shares, using treasury stock method	533	1,497	644	1,540
Weighted-average shares outstanding - diluted	100,668	107,327	103,340	110,032
Net income per share:
Basic	$ 0.30	$ 0.48	$ 0.89	$ 0.97
Diluted	$ 0.30	$ 0.47	$ 0.88	$ 0.96

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Condensed Consolidated Balance Sheets (Unaudited) (USD $) In Thousands, unless otherwise specified	Jan. 01, 2012	Apr. 03, 2011
Current assets:
Cash and cash equivalents	$ 74,198	$ 147,780
Marketable securities	321,627	236,296
Accounts receivable, less allowance for doubtful accounts of $1,530 and $1,536 as of January 1, 2012 and April 3, 2011, respectively	82,221	70,134
Inventories	26,967	26,931
Deferred tax assets	19,954	17,754
Other current assets	13,390	20,753
Total current assets	538,357	519,648
Property and equipment, net	78,715	77,134
Goodwill	119,748	119,748
Purchased intangible assets, net	10,179	12,694
Deferred tax assets	27,284	25,333
Other assets	2,082	2,650
Total assets	776,365	757,207
Current liabilities:
Accounts payable	35,099	34,816
Accrued compensation	28,240	25,858
Accrued taxes	3,029	6,012
Deferred revenue	10,348	10,431
Other current liabilities	6,356	5,221
Total current liabilities	83,072	82,338
Accrued taxes	62,409	62,565
Deferred revenue	3,840	5,169
Other liabilities	5,922	5,971
Total liabilities	155,243	156,043
Stockholders' equity:
Preferred stock, $0.001 par value; 1,000,000 shares authorized; no shares issued and outstanding
Common stock, $0.001 par value; 500,000,000 shares authorized; 209,459,000 and 208,042,000 shares issued as of January 1, 2012 and April 3, 2011, respectively	209	208
Additional paid-in capital	877,763	844,546
Retained earnings	1,478,870	1,387,765
Accumulated other comprehensive income	299	614
Treasury stock, at cost: 110,498,000 and 103,325,000 shares as of January 1, 2012 and April 3, 2011, respectively	(1,736,019)	(1,631,969)
Total stockholders' equity	621,122	601,164
Total liabilities and stockholders' equity	$ 776,365	$ 757,207

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Basis of Presentation

9 Months Ended

Jan. 01, 2012

Basis of Presentation [Abstract]

Basis of Presentation

Note 1. Basis of Presentation

In the opinion of management of QLogic Corporation (QLogic or the Company), the accompanying unaudited condensed consolidated financial statements contain all normal recurring accruals and adjustments necessary to present fairly the Company’s consolidated financial position, results of operations and cash flows. The accompanying condensed consolidated financial statements should be read in conjunction with the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended April 3, 2011. The results of operations for the three and nine months ended January 1, 2012 are not necessarily indicative of the results that may be expected for the entire fiscal year. The preparation of financial statements in accordance with U.S. generally accepted accounting principles requires management to make estimates that affect the amounts reported in the Company’s consolidated financial statements and accompanying notes. The Company evaluates its estimates on an ongoing basis using historical experience and other factors, including the current economic environment. Among the significant estimates affecting the consolidated financial statements are those related to revenue recognition, stock-based compensation, income taxes, investment securities, inventories, goodwill and long-lived assets. The actual results experienced by the Company could differ materially from management’s estimates.

Recently Adopted Accounting Standards

In September 2009, the Financial Accounting Standards Board reached a consensus on Accounting Standards Update (ASU) 2009-13, “Revenue Recognition (Topic 605) — Multiple-Deliverable Revenue Arrangements” and ASU 2009-14, “Software (Topic 985) — Certain Revenue Arrangements That Include Software Elements.” ASU 2009-13 modifies the requirements that must be met for an entity to recognize revenue from the sale of a delivered item that is part of a multiple-element arrangement when other items have not yet been delivered. ASU 2009-13 establishes a selling price hierarchy that allows for the use of an estimated selling price to determine the allocation of arrangement consideration to a deliverable in a multiple-element arrangement where neither vendor-specific objective evidence nor third-party evidence is available for that deliverable. Overall arrangement consideration is allocated at the inception of the arrangement to all deliverables based on their relative selling prices. The residual method of allocating arrangement consideration has been eliminated. ASU 2009-14 modifies the software revenue recognition guidance to exclude from its scope tangible products that contain both software and non-software components that function together to deliver a product’s essential functionality. The Company adopted the provisions of these standards beginning in the first quarter of fiscal 2012 on a prospective basis. The adoption of these standards did not have a material impact on the Company’s condensed consolidated financial statements.

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Subsequent Event (Detalis) (Intel Corporation [Member], USD $) In Millions, unless otherwise specified	1 Months Ended
	Jan. 20, 2012
Intel Corporation [Member]
Subsequent Event (Textual) [Abstract]
Definitive agreement to sell the product lines and certain assets associated with its InfiniBand business	$ 125

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Comprehensive Income (Tables)

9 Months Ended

Jan. 01, 2012

Comprehensive Income [Abstract]

Components of Comprehensive Income

	Three Months Ended					Nine Months Ended
	January 1, 2012		December 26, 2010			January 1, 2012			December 26, 2010
	(In thousands)
Net income	$	30,025	$	50,339		$	91,105		$	105,774
Other comprehensive income:
Change in unrealized gains/losses on marketable securities, net of income taxes		218		(835	)		(315	)		(758	)
	$	30,243	$	49,504		$	90,790		$	105,016

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Marketable Securities (Details 1) (USD $) In Thousands, unless otherwise specified	Jan. 01, 2012
Schedule of Amortized Cost and Estimated Fair Value of Debt Securities
Due in one year or less, Amortized Cost	$ 108,574
Due after one year through three years, Amortized Cost	147,688
Due after three years through five years, Amortized Cost	20,977
Due after five years, Amortized Cost	43,606
Total amortized cost of debt securities	320,845
Due in one year or less, Estimated Fair Value	108,884
Due after one year through three years, Estimated Fair Value	147,830
Due after three years through five years, Estimated Fair Value	20,972
Due after five years, Estimated Fair Value	43,749
Total estimated fair value of debt securities	$ 321,435

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Marketable Securities

9 Months Ended

Jan. 01, 2012

Marketable Securities [Abstract]

Marketable Securities

Note 2. Marketable Securities

The Company’s portfolio of available-for-sale marketable securities consists of the following:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
	(In thousands)
January 1, 2012
U.S. government and agency securities	$	121,512	$	233	$	(27	)	$	121,718
Corporate debt obligations		144,650		750		(531	)		144,869
Asset and mortgage-backed securities		38,895		218		(73	)		39,040
Municipal bonds		15,788		22		(2	)		15,808
Total debt securities		320,845		1,223		(633	)		321,435
Certificates of deposit		192		—		—			192
	$	321,037	$	1,223	$	(633	)	$	321,627
April 3, 2011
U.S. government and agency securities	$	55,875	$	94	$	(216	)	$	55,753
Corporate debt obligations		137,706		1,012		(282	)		138,436
Asset and mortgage-backed securities		22,249		293		(52	)		22,490
Municipal bonds		17,941		10		(10	)		17,941
Non-U.S. government and agency securities		1,676		—		—			1,676
	$	235,447	$	1,409	$	(560	)	$	236,296

The amortized cost and estimated fair value of debt securities as of January 1, 2012, by contractual maturity, are presented below. Expected maturities will differ from contractual maturities because the issuers of securities may have the right to repay obligations without prepayment penalties. Certain debt instruments, although possessing a contractual maturity greater than one year, are classified as short-term marketable securities based on their ability to be traded on active markets and availability for current operations.

	Amortized Cost		Estimated Fair Value
	(In thousands)
Due in one year or less	$	108,574	$	108,884
Due after one year through three years		147,688		147,830
Due after three years through five years		20,977		20,972
Due after five years		43,606		43,749
	$	320,845	$	321,435

The following table presents the Company’s marketable securities with unrealized losses by investment category and length of time that individual securities have been in a continuous unrealized loss position as of January 1, 2012 and April 3, 2011.

	Less Than 12 Months					12 Months or Greater					Total
Description of Securities	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
	(In thousands)
January 1, 2012
U.S. government and agency securities	$	48,183	$	(27	)	$	—	$	—		$	48,183	$	(27	)
Corporate debt obligations		65,975		(529	)		327		(2	)		66,302		(531	)
Asset and mortgage-backed securities		14,935		(73	)		—		—			14,935		(73	)
Municipal bonds		2,073		(2	)		—		—			2,073		(2	)
	$	131,166	$	(631	)	$	327	$	(2	)	$	131,493	$	(633	)
April 3, 2011
U.S. government and agency securities	$	25,712	$	(216	)	$	—	$	—		$	25,712	$	(216	)
Corporate debt obligations		60,595		(282	)		—		—			60,595		(282	)
Asset and mortgage-backed securities		7,991		(52	)		—		—			7,991		(52	)
Municipal bonds		1,866		(10	)		—		—			1,866		(10	)
	$	96,164	$	(560	)	$	—	$	—		$	96,164	$	(560	)

As of January 1, 2012 and April 3, 2011, the fair value of certain of the Company’s available-for-sale securities was less than their cost basis. Management reviewed various factors in determining whether to recognize an impairment charge related to these unrealized losses, including the current financial and credit market environment, the financial condition and near-term prospects of the issuer of the investment security, the magnitude of the unrealized loss compared to the cost of the investment, the length of time the investment had been in a loss position and the Company’s intent and ability to hold the investment for a period of time sufficient to allow for any anticipated recovery of market value. As of January 1, 2012 and April 3, 2011, the Company determined that the unrealized losses were temporary in nature and recorded them as a component of accumulated other comprehensive income.

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Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Jan. 01, 2012	Apr. 03, 2011
Condensed Consolidated Balance Sheets [Abstract]
Allowance for doubtful accounts	$ 1,530	$ 1,536
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares authorized	1,000,000	1,000,000
Preferred stock, shares issued
Preferred stock, shares outstanding
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	500,000,000	500,000,000
Common stock, shares issued	209,459,000	208,042,000
Treasury stock, shares	110,498,000	103,325,000

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Marketable Securities (Tables)

9 Months Ended

Jan. 01, 2012

Marketable Securities [Abstract]

Schedule of Available-For-Sale Securities

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
	(In thousands)
January 1, 2012
U.S. government and agency securities	$	121,512	$	233	$	(27	)	$	121,718
Corporate debt obligations		144,650		750		(531	)		144,869
Asset and mortgage-backed securities		38,895		218		(73	)		39,040
Municipal bonds		15,788		22		(2	)		15,808
Total debt securities		320,845		1,223		(633	)		321,435
Certificates of deposit		192		—		—			192
	$	321,037	$	1,223	$	(633	)	$	321,627
April 3, 2011
U.S. government and agency securities	$	55,875	$	94	$	(216	)	$	55,753
Corporate debt obligations		137,706		1,012		(282	)		138,436
Asset and mortgage-backed securities		22,249		293		(52	)		22,490
Municipal bonds		17,941		10		(10	)		17,941
Non-U.S. government and agency securities		1,676		—		—			1,676
	$	235,447	$	1,409	$	(560	)	$	236,296

Schedule of Amortized Cost and Estimated Fair Value of Debt Securities

	Amortized Cost		Estimated Fair Value
	(In thousands)
Due in one year or less	$	108,574	$	108,884
Due after one year through three years		147,688		147,830
Due after three years through five years		20,977		20,972
Due after five years		43,606		43,749
	$	320,845	$	321,435

Schedule of Unrealized Losses by Investment Company

	Less Than 12 Months					12 Months or Greater					Total
Description of Securities	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
	(In thousands)
January 1, 2012
U.S. government and agency securities	$	48,183	$	(27	)	$	—	$	—		$	48,183	$	(27	)
Corporate debt obligations		65,975		(529	)		327		(2	)		66,302		(531	)
Asset and mortgage-backed securities		14,935		(73	)		—		—			14,935		(73	)
Municipal bonds		2,073		(2	)		—		—			2,073		(2	)
	$	131,166	$	(631	)	$	327	$	(2	)	$	131,493	$	(633	)
April 3, 2011
U.S. government and agency securities	$	25,712	$	(216	)	$	—	$	—		$	25,712	$	(216	)
Corporate debt obligations		60,595		(282	)		—		—			60,595		(282	)
Asset and mortgage-backed securities		7,991		(52	)		—		—			7,991		(52	)
Municipal bonds		1,866		(10	)		—		—			1,866		(10	)
	$	96,164	$	(560	)	$	—	$	—		$	96,164	$	(560	)

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Document and Entity Information	9 Months Ended
	Jan. 01, 2012	Jan. 27, 2012
Document and Entity Information [Abstract]
Entity Registrant Name	QLOGIC CORP
Entity Central Index Key	0000918386
Document Type	10-Q
Document Period End Date	Jan. 01, 2012
Amendment Flag	false
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q3
Current Fiscal Year End Date	--04-01
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		98,669,000

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Fair Value Measurements (Tables)

9 Months Ended

Jan. 01, 2012

Fair Value Measurements [Abstract]

Schedule Of Assets Measured At Fair Value On A Recurring Basis

	Fair Value Measurements Using
	Level 1		Level 2		Level 3		Total
January 1, 2012	(In thousands)
Cash and cash equivalents	$	70,189	$	4,009	$	—	$	74,198
Marketable securities:
U.S. government and agency securities		121,718		—		—		121,718
Corporate debt obligations		—		144,869		—		144,869
Asset and mortgage-backed securities		—		39,040		—		39,040
Municipal bonds		—		15,808		—		15,808
Certificates of deposit		192		—		—		192
		121,910		199,717		—		321,627
	$	192,099	$	203,726	$	—	$	395,825
April 3, 2011
Cash and cash equivalents	$	146,281	$	1,499	$	—	$	147,780
Marketable securities:
U.S. government and agency securities		55,753		—		—		55,753
Corporate debt obligations		—		138,436		—		138,436
Asset and mortgage-backed securities		—		22,490		—		22,490
Municipal bonds		—		17,941		—		17,941
Non-U.S. government and agency securities		—		1,676		—		1,676
		55,753		180,543		—		236,296
	$	202,034	$	182,042	$	—	$	384,076

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Condensed Consolidated Statements of Income (Unaudited) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Jan. 01, 2012	Dec. 26, 2010	Jan. 01, 2012	Dec. 26, 2010
Condensed Consolidated Statements of Income [Abstract]
Net revenues	$ 152,661	$ 155,771	$ 454,463	$ 444,909
Cost of revenues	52,055	53,000	154,010	153,112
Gross profit	100,606	102,771	300,453	291,797
Operating expenses:
Engineering and development	36,883	33,148	112,446	100,649
Sales and marketing	21,514	20,103	63,219	60,953
General and administrative	8,803	9,061	26,820	25,560
Special charges				931
Total operating expenses	67,200	62,312	202,485	188,093
Operating income	33,406	40,459	97,968	103,704
Interest and other income, net	798	773	2,926	4,258
Income before income taxes	34,204	41,232	100,894	107,962
Income taxes	4,179	(9,107)	9,789	2,188
Net income	$ 30,025	$ 50,339	$ 91,105	$ 105,774
Net income per share:
Basic	$ 0.30	$ 0.48	$ 0.89	$ 0.97
Diluted	$ 0.30	$ 0.47	$ 0.88	$ 0.96
Number of shares used in per share calculations:
Basic	100,135	105,830	102,696	108,492
Diluted	100,668	107,327	103,340	110,032

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Income Taxes

9 Months Ended

Jan. 01, 2012

Income Taxes [Abstract]

Income Taxes

Note 7. Income Taxes

The Company’s provision (benefit) for income taxes was $4.2 million and $9.8 million for the three and nine months ended January 1, 2012, respectively, and $(9.1) million and $2.2 million for the three and nine months ended December 26, 2010, respectively.

The effective tax rate was 10% and 2% for the nine months ended January 1, 2012 and December 26, 2010, respectively. The effective tax rate is based upon the estimated income for the year, the composition of the estimated income in different tax jurisdictions, and the tax effect, if any, in the applicable quarterly periods of newly enacted tax legislation, resolution of tax audits, changes in uncertain tax positions, and other discrete tax related items. The allocation of taxable income to domestic and foreign tax jurisdictions impacts the effective tax rate, as the Company’s income tax rate in foreign jurisdictions is generally lower than its income tax rate in the United States.

The effective tax rate for the nine months ended January 1, 2012 was favorably impacted by certain discrete tax related items, principally the resolution of state income tax examinations. The effective tax rate for the nine months ended December 26, 2010 was favorably impacted by $14.6 million of income tax benefits related to the expiration of certain statutes of limitation, the retroactive reinstatement of the federal research tax credit and certain other items that were recorded in the three months ended December 26, 2010.

The Company’s federal consolidated income tax returns for fiscal years 2008 and 2009 are currently under examination by the Internal Revenue Service. Management does not believe that the results of these examinations will have a material impact on the Company’s financial condition or results of operations.

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Stock-Based Compensation

9 Months Ended

Jan. 01, 2012

Stock-Based Compensation [Abstract]

Stock-Based Compensation

Note 6. Stock-Based Compensation

During the nine months ended January 1, 2012, the Company granted options to purchase 1.6 million shares of common stock and 1.6 million restricted stock units with weighted average grant date fair values of $5.73 and $15.55 per share, respectively, and also granted 0.2 million restricted stock units with performance conditions to certain senior executives.

A summary of stock-based compensation expense, by functional line item in the condensed consolidated statements of income, is as follows:

	Three Months Ended				Nine Months Ended
	January 1, 2012		December 26, 2010		January 1, 2012		December 26, 2010
	(In thousands)
Cost of revenues	$	632	$	599	$	2,075	$	1,962
Engineering and development		3,553		3,714		11,776		12,692
Sales and marketing		1,924		1,824		5,625		5,866
General and administrative		1,991		2,382		6,311		6,591
	$	8,100	$	8,519	$	25,787	$	27,111

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Marketable Securities (Details) (USD $) In Thousands, unless otherwise specified	Jan. 01, 2012	Apr. 03, 2011
Schedule of Available-For-Sale Securities
Available-for-sale securities, Amortized Cost	$ 321,037	$ 235,447
Available-for-sale securities, Gross Unrealized Gains	1,223	1,409
Available-for-sale securities, Gross Unrealized Losses	(633)	(560)
Available-for-sale securities, Estimated Fair Value	321,627	236,296
U.S. Government and agency securities [Member]
Schedule of Available-For-Sale Securities
Available-for-sale securities, Amortized Cost	121,512	55,875
Available-for-sale securities, Gross Unrealized Gains	233	94
Available-for-sale securities, Gross Unrealized Losses	(27)	(216)
Available-for-sale securities, Estimated Fair Value	121,718	55,753
Corporate debt obligations [Member]
Schedule of Available-For-Sale Securities
Available-for-sale securities, Amortized Cost	144,650	137,706
Available-for-sale securities, Gross Unrealized Gains	750	1,012
Available-for-sale securities, Gross Unrealized Losses	(531)	(282)
Available-for-sale securities, Estimated Fair Value	144,869	138,436
Asset and mortgage-backed securities [Member]
Schedule of Available-For-Sale Securities
Available-for-sale securities, Amortized Cost	38,895	22,249
Available-for-sale securities, Gross Unrealized Gains	218	293
Available-for-sale securities, Gross Unrealized Losses	(73)	(52)
Available-for-sale securities, Estimated Fair Value	39,040	22,490
Municipal bonds [Member]
Schedule of Available-For-Sale Securities
Available-for-sale securities, Amortized Cost	15,788	17,941
Available-for-sale securities, Gross Unrealized Gains	22	10
Available-for-sale securities, Gross Unrealized Losses	(2)	(10)
Available-for-sale securities, Estimated Fair Value	15,808	17,941
Non-U.S. government and agency securities [Member]
Schedule of Available-For-Sale Securities
Available-for-sale securities, Amortized Cost		1,676
Available-for-sale securities, Gross Unrealized Gains		0
Available-for-sale securities, Gross Unrealized Losses		0
Available-for-sale securities, Estimated Fair Value		1,676
Total debt securities [Member]
Schedule of Available-For-Sale Securities
Available-for-sale securities, Amortized Cost	320,845
Available-for-sale securities, Gross Unrealized Gains	1,223
Available-for-sale securities, Gross Unrealized Losses	(633)
Available-for-sale securities, Estimated Fair Value	321,435
Certificates of deposit [Member]
Schedule of Available-For-Sale Securities
Available-for-sale securities, Amortized Cost	192
Available-for-sale securities, Gross Unrealized Gains	0
Available-for-sale securities, Gross Unrealized Losses	0
Available-for-sale securities, Estimated Fair Value	$ 192

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Inventories (Tables)

9 Months Ended

Jan. 01, 2012

Inventories [Abstract]

Components of Inventories

	January 1, 2012		April 3, 2011
	(In thousands)
Raw materials	$	6,669	$	5,702
Finished goods		20,298		21,229
	$	26,967	$	26,931

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Subsequent Event

9 Months Ended

Jan. 01, 2012

Subsequent Event [Abstract]

Subsequent Event

Note 10. Subsequent Event

On January 20, 2012, the Company entered into a definitive agreement to sell the product lines and certain assets associated with its InfiniBand business to Intel Corporation for $125 million in cash, subject to downward adjustment based on inventory at closing. The assets to be sold are comprised primarily of technology, property and equipment, and inventories related to the InfiniBand business. The carrying value of the net assets associated with the InfiniBand business, including an allocation of the Company’s goodwill, is not material to the Company’s condensed consolidated balance sheet as of January 1, 2012. The transaction, which is subject to regulatory approvals and other customary closing conditions, is expected to close in the fourth quarter of fiscal 2012.

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Net Income Per Share

9 Months Ended

Jan. 01, 2012

Net Income Per Share [Abstract]

Net Income Per Share

Note 8. Net Income Per Share

The following table sets forth the computation of basic and diluted net income per share:

	Three Months Ended				Nine Months Ended
	January 1, 2012		December 26, 2010		January 1, 2012		December 26, 2010
	(In thousands, except per share amounts)
Net income	$	30,025	$	50,339	$	91,105	$	105,774
Shares:
Weighted-average shares outstanding — basic		100,135		105,830		102,696		108,492
Dilutive potential common shares, using treasury stock method		533		1,497		644		1,540
Weighted-average shares outstanding — diluted		100,668		107,327		103,340		110,032
Net income per share:
Basic	$	0.30	$	0.48	$	0.89	$	0.97
Diluted	$	0.30	$	0.47	$	0.88	$	0.96

Stock-based awards, including stock options and restricted stock units, representing 19.2 million and 18.2 million shares of common stock have been excluded from the diluted net income per share calculations for the three and nine months ended January 1, 2012, respectively, and 13.3 million and 15.1 million shares of common stock have been excluded from the diluted net income per share calculations for the three and nine months ended December 26, 2010, respectively. These stock-based awards have been excluded from the diluted net income per share calculations because their effect would have been antidilutive.

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Comprehensive Income

9 Months Ended

Jan. 01, 2012

Comprehensive Income [Abstract]

Comprehensive Income

Note 9. Comprehensive Income

Components of comprehensive income are as follows:

	Three Months Ended					Nine Months Ended
	January 1, 2012		December 26, 2010			January 1, 2012			December 26, 2010
	(In thousands)
Net income	$	30,025	$	50,339		$	91,105		$	105,774
Other comprehensive income:
Change in unrealized gains/losses on marketable securities, net of income taxes		218		(835	)		(315	)		(758	)
	$	30,243	$	49,504		$	90,790		$	105,016

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Basis of Presentation (Policies)

9 Months Ended

Jan. 01, 2012

Basis of Presentation [Abstract]

Recently Adopted Accounting Standards Policy

Recently Adopted Accounting Standards

In September 2009, the Financial Accounting Standards Board reached a consensus on Accounting Standards Update (ASU) 2009-13, “Revenue Recognition (Topic 605) — Multiple-Deliverable Revenue Arrangements” and ASU 2009-14, “Software (Topic 985) — Certain Revenue Arrangements That Include Software Elements.” ASU 2009-13 modifies the requirements that must be met for an entity to recognize revenue from the sale of a delivered item that is part of a multiple-element arrangement when other items have not yet been delivered. ASU 2009-13 establishes a selling price hierarchy that allows for the use of an estimated selling price to determine the allocation of arrangement consideration to a deliverable in a multiple-element arrangement where neither vendor-specific objective evidence nor third-party evidence is available for that deliverable. Overall arrangement consideration is allocated at the inception of the arrangement to all deliverables based on their relative selling prices. The residual method of allocating arrangement consideration has been eliminated. ASU 2009-14 modifies the software revenue recognition guidance to exclude from its scope tangible products that contain both software and non-software components that function together to deliver a product’s essential functionality. The Company adopted the provisions of these standards beginning in the first quarter of fiscal 2012 on a prospective basis. The adoption of these standards did not have a material impact on the Company’s condensed consolidated financial statements.

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Comprehensive Income (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Jan. 01, 2012	Dec. 26, 2010	Jan. 01, 2012	Dec. 26, 2010
Components of comprehensive income
Net income	$ 30,025	$ 50,339	$ 91,105	$ 105,774
Other comprehensive income:
Change in unrealized gains/losses on investment securities, net of income taxes	218	(835)	(315)	(758)
Total comprehensive income	$ 30,243	$ 49,504	$ 90,790	$ 105,016

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Net Income Per Share (Tables)

9 Months Ended

Jan. 01, 2012

Net Income Per Share [Abstract]

Net Income Per Share

	Three Months Ended				Nine Months Ended
	January 1, 2012		December 26, 2010		January 1, 2012		December 26, 2010
	(In thousands, except per share amounts)
Net income	$	30,025	$	50,339	$	91,105	$	105,774
Shares:
Weighted-average shares outstanding — basic		100,135		105,830		102,696		108,492
Dilutive potential common shares, using treasury stock method		533		1,497		644		1,540
Weighted-average shares outstanding — diluted		100,668		107,327		103,340		110,032
Net income per share:
Basic	$	0.30	$	0.48	$	0.89	$	0.97
Diluted	$	0.30	$	0.47	$	0.88	$	0.96

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Fair Value Measurements (Details) (USD $) In Thousands, unless otherwise specified	Jan. 01, 2012	Apr. 03, 2011
Schedule of Assets Measured at Fair Value on a Recurring Basis
Marketable securities	$ 321,627	$ 236,296
Fair Value, Measurements, Recurring [Member]
Schedule of Assets Measured at Fair Value on a Recurring Basis
Cash and cash equivalents	74,198	147,780
Marketable securities	321,627	236,296
Total assets at fair value disclosure	395,825	384,076
U.S. Government and agency securities [Member] | Fair Value, Measurements, Recurring [Member]
Schedule of Assets Measured at Fair Value on a Recurring Basis
Marketable securities	121,718	55,753
Corporate debt obligations [Member] | Fair Value, Measurements, Recurring [Member]
Schedule of Assets Measured at Fair Value on a Recurring Basis
Marketable securities	144,869	138,436
Asset and mortgage-backed securities [Member] | Fair Value, Measurements, Recurring [Member]
Schedule of Assets Measured at Fair Value on a Recurring Basis
Marketable securities	39,040	22,490
Municipal bonds [Member] | Fair Value, Measurements, Recurring [Member]
Schedule of Assets Measured at Fair Value on a Recurring Basis
Marketable securities	15,808	17,941
Non-U.S. government and agency securities [Member] | Fair Value, Measurements, Recurring [Member]
Schedule of Assets Measured at Fair Value on a Recurring Basis
Marketable securities		1,676
Certificates of deposit [Member] | Fair Value, Measurements, Recurring [Member]
Schedule of Assets Measured at Fair Value on a Recurring Basis
Marketable securities	192
Fair Value Measurements Using, Level 1 [Member] | Fair Value, Measurements, Recurring [Member]
Schedule of Assets Measured at Fair Value on a Recurring Basis
Cash and cash equivalents	70,189	146,281
Marketable securities	121,910	55,753
Total assets at fair value disclosure	192,099	202,034
Fair Value Measurements Using, Level 1 [Member] | U.S. Government and agency securities [Member] | Fair Value, Measurements, Recurring [Member]
Schedule of Assets Measured at Fair Value on a Recurring Basis
Marketable securities	121,718	55,753
Fair Value Measurements Using, Level 1 [Member] | Corporate debt obligations [Member] | Fair Value, Measurements, Recurring [Member]
Schedule of Assets Measured at Fair Value on a Recurring Basis
Marketable securities	0	0
Fair Value Measurements Using, Level 1 [Member] | Asset and mortgage-backed securities [Member] | Fair Value, Measurements, Recurring [Member]
Schedule of Assets Measured at Fair Value on a Recurring Basis
Marketable securities	0
Fair Value Measurements Using, Level 1 [Member] | Municipal bonds [Member] | Fair Value, Measurements, Recurring [Member]
Schedule of Assets Measured at Fair Value on a Recurring Basis
Marketable securities	0	0
Fair Value Measurements Using, Level 1 [Member] | Certificates of deposit [Member]
Schedule of Assets Measured at Fair Value on a Recurring Basis
Marketable securities	192
Fair Value Measurements Using, Level 2 [Member] | Fair Value, Measurements, Recurring [Member]
Schedule of Assets Measured at Fair Value on a Recurring Basis
Cash and cash equivalents	4,009	1,499
Marketable securities	199,717	180,543
Total assets at fair value disclosure	203,726	182,042
Fair Value Measurements Using, Level 2 [Member] | U.S. Government and agency securities [Member] | Fair Value, Measurements, Recurring [Member]
Schedule of Assets Measured at Fair Value on a Recurring Basis
Marketable securities	0	0
Fair Value Measurements Using, Level 2 [Member] | Corporate debt obligations [Member] | Fair Value, Measurements, Recurring [Member]
Schedule of Assets Measured at Fair Value on a Recurring Basis
Marketable securities	144,869	138,436
Fair Value Measurements Using, Level 2 [Member] | Asset and mortgage-backed securities [Member] | Fair Value, Measurements, Recurring [Member]
Schedule of Assets Measured at Fair Value on a Recurring Basis
Marketable securities	39,040	22,490
Fair Value Measurements Using, Level 2 [Member] | Municipal bonds [Member] | Fair Value, Measurements, Recurring [Member]
Schedule of Assets Measured at Fair Value on a Recurring Basis
Marketable securities	15,808	17,941
Fair Value Measurements Using, Level 2 [Member] | Non-U.S. government and agency securities [Member] | Fair Value, Measurements, Recurring [Member]
Schedule of Assets Measured at Fair Value on a Recurring Basis
Marketable securities		1,676
Fair Value Measurements Using, Level 2 [Member] | Certificates of deposit [Member]
Schedule of Assets Measured at Fair Value on a Recurring Basis
Marketable securities	0
Fair Value Measurements Using, Level 3 [Member] | Fair Value, Measurements, Recurring [Member]
Schedule of Assets Measured at Fair Value on a Recurring Basis
Cash and cash equivalents	0	0
Marketable securities	0	0
Total assets at fair value disclosure	0	0
Fair Value Measurements Using, Level 3 [Member] | U.S. Government and agency securities [Member] | Fair Value, Measurements, Recurring [Member]
Schedule of Assets Measured at Fair Value on a Recurring Basis
Marketable securities	0	0
Fair Value Measurements Using, Level 3 [Member] | Corporate debt obligations [Member] | Fair Value, Measurements, Recurring [Member]
Schedule of Assets Measured at Fair Value on a Recurring Basis
Marketable securities	0	0
Fair Value Measurements Using, Level 3 [Member] | Asset and mortgage-backed securities [Member] | Fair Value, Measurements, Recurring [Member]
Schedule of Assets Measured at Fair Value on a Recurring Basis
Marketable securities	0	0
Fair Value Measurements Using, Level 3 [Member] | Municipal bonds [Member] | Fair Value, Measurements, Recurring [Member]
Schedule of Assets Measured at Fair Value on a Recurring Basis
Marketable securities	0	0
Fair Value Measurements Using, Level 3 [Member] | Non-U.S. government and agency securities [Member] | Fair Value, Measurements, Recurring [Member]
Schedule of Assets Measured at Fair Value on a Recurring Basis
Marketable securities		0
Fair Value Measurements Using, Level 3 [Member] | Certificates of deposit [Member]
Schedule of Assets Measured at Fair Value on a Recurring Basis
Marketable securities	$ 0

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Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Jan. 01, 2012	Dec. 26, 2010
Cash flows from operating activities:
Net income	$ 91,105	$ 105,774
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	21,047	22,612
Stock-based compensation	25,787	27,111
Amortization of acquisition-related intangible assets	3,467	3,467
Deferred income taxes	(4,334)	6,810
Net gains on investment securities	(729)	(2,021)
Other non-cash items	5,811	1,435
Changes in operating assets and liabilities:
Accounts receivable	(12,244)	(10,769)
Inventories	(36)	(6,454)
Other assets	119	841
Accounts payable	(2,333)	(6,232)
Accrued compensation	2,382	405
Accrued taxes	4,531	(21,068)
Deferred revenue	(1,412)	(685)
Other liabilities	936	(3,968)
Net cash provided by operating activities	134,097	117,258
Cash flows from investing activities:
Purchases of available-for-sale securities	(336,005)	(221,884)
Proceeds from sales and maturities of available-for-sale securities	247,928	146,840
Proceeds from disposition of trading securities		23,800
Distributions from other investment securities		329
Purchases of property and equipment	(23,480)	(17,881)
Net cash used in investing activities	(111,557)	(68,796)
Cash flows from financing activities:
Proceeds from issuance of common stock under stock-based awards	12,674	29,637
Excess tax benefits from stock-based awards	529	1,610
Minimum tax withholding paid on behalf of employees for restricted stock units	(5,425)	(6,739)
Purchases of treasury stock	(103,900)	(156,986)
Net cash used in financing activities	(96,122)	(132,478)
Net decrease in cash and cash equivalents	(73,582)	(84,016)
Cash and cash equivalents at beginning of period	147,780	190,308
Cash and cash equivalents at end of period	$ 74,198	$ 106,292

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Treasury Stock

9 Months Ended

Jan. 01, 2012

Treasury Stock [Abstract]

Treasury Stock

Note 5. Treasury Stock

In November 2011, the Board of Directors approved a program to repurchase up to an additional $200 million of the Company’s outstanding common stock over a two-year period commencing upon the conclusion of the existing program approved in August 2010. Since fiscal 2003, the Company has had various stock repurchase programs that authorized the purchase of up to $1.95 billion of its outstanding common stock.

Repurchased shares have been recorded as treasury shares and will be held until the Company’s Board of Directors designates that these shares be retired or used for other purposes.

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Inventories (Details) (USD $) In Thousands, unless otherwise specified	Jan. 01, 2012	Apr. 03, 2011
Components of inventories
Raw materials	$ 6,669	$ 5,702
Finished goods	20,298	21,229
Inventory, net, total	$ 26,967	$ 26,931

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Stock-Based Compensation (Tables)

9 Months Ended

Jan. 01, 2012

Stock-Based Compensation [Abstract]

Summary of Stock-Based Compensation Expense

	Three Months Ended				Nine Months Ended
	January 1, 2012		December 26, 2010		January 1, 2012		December 26, 2010
	(In thousands)
Cost of revenues	$	632	$	599	$	2,075	$	1,962
Engineering and development		3,553		3,714		11,776		12,692
Sales and marketing		1,924		1,824		5,625		5,866
General and administrative		1,991		2,382		6,311		6,591
	$	8,100	$	8,519	$	25,787	$	27,111