Shares in data storage company QLogic (NASDAQ:QLGC) screamed lower by more than 20% this morning after the company warned that earnings and revenues for its fourth quarter, which ended on Sunday, will be below what it previously indicated, with generally accepted accounting principles (GAAP) earnings now projected at about $0.34 per diluted share.

This lowered guidance for the quarter was fairly close to the range the company had spelled out in the third quarter conference call a few months ago, but the stock's still getting shellacked. The reason for this is simple: QLogic was priced for perfection, coming in at nearly eight times sales. So when, according to a Merrill Lynch analyst who downgraded the stock after the warning (and just in time, too...), QLogic suffered a decline in "host bus adapters from two of the company's OEMs at the end of the quarter," the only way that the stock could possibly react was to go south, fast.

Got that? A slightly lower sales result for a few weeks in March is worth $1 billion in market capitalization. That's nearly how much QLogic has lost. Who were these original equipment manufacturers (OEMs)? Merrill suggested that one of them is Sun Microsystems (NASDAQ:SUNW), which has had recent troubles of its own. One would think that a few pennies in a single quarter ought not to be that big of a deal -- but this is precisely what happens when investors discount total success and growth to the sky. One would also think that an analyst who can quickly determine the source of a problem within minutes could have also predicted the problem, but there you go.

What you have to wonder about, following this announcement, is whether QLogic's problem is endemic to the company, or whether the vaunted technology recovery isn't as strong as people have been led to believe. As we've seen, the fast replacement cycle and attractive economics of the tech sector attracts heavy competition -- note the rumors earlier this month that Applied Micro Circuits (NASDAQ:AMCC) was being qualified by an OEM as another potential supplier of host bus adapters. The skittishness of the sector this morning suggests to me that more investors are finally considering the second of the two options -- that the long-term technology recovery isn't as healthy as they thought. Emulex (NYSE:ELX), EMC (NYSE:EMC), and Brocade (NASDAQ:BRCD), among others, were clobbered this morning. There's a danger in extrapolating short-term movements as being some sort of investor consensus, but I do get the feeling that QLogic's warning has alerted some folks to an outcome whose potential they had not considered.

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Bill Mann owns none of the companies mentioned in this story. Please view his profile for a complete list of holdings.