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Marvell Technology Results Top Estimates; Outlook Upbeat


Chipmaker Marvell Technology Group Ltd. (MRVL) said Thursday after the markets closed that its fourth quarter profit fell 38% from last year, as higher costs and expenses more than offset a 4% increase in revenue.

However, the company's quarterly earnings per share, excluding items, handily beat analysts' estimates as did its quarterly revenue. At the same time, the company issued upbeat revenue and earnings outlooks for the first quarter.

"Fiscal year 2013 was a disappointing year for Marvell. Industry hard disk drive unit shipments declined for the year offsetting share gains, the networking end market was relatively flat and we endured a product transition in Mobile. Despite the revenue decline, Marvell remained profitable and generated $626 million in free cash flow while simultaneously continuing investments in several key initiatives," said Dr. Sehat Sutardja, Marvell's Chairman and Chief Executive Officer.

Marvell shares are currently gaining 4.65% in after hours trading after closing the day's regular trading session at $9.47, up 23 cents or 2.49%. The shares trade in a 52-week range of $6.98 to $16.31.

Marvell makes chips for mobile phones and for storage devices. Marvell's storage business, which makes chips for hard disk and solid state drives, has been negatively impacted by slowing demand for desktops and notebooks, as customers switch to post-PC products like tablets and smartphones.

Marvell's wireless business, which makes broadband & wireless transceivers used in phones, is also facing problems due to its struggling customer Research in Motion and on competition from smaller rivals.

For the fourth quarter ended February 2, 2013, the company reported net income of $50.2 million or $0.09 per share, compared to $80.7 million or $0.13 per share for the year-ago quarter.

Excluding items, adjusted net income for the fourth quarter was $104.4 million or $0.19 per share, compared to $126.6 million or $0.21 per share in the prior year quarter.

On average, 26 analysts polled by Thomson Reuters expected the company to earn $0.13 per share for the fourth quarter. Analysts' estimates typically exclude special items.

Gross margin for the quarter narrowed to 52.2% from 54.1% a year ago, while adjusted gross margin shrank to 53.2% from 54.5% last year.

Net revenue for the fourth quarter rose 4% to $775.29 million from $742.70 million in the same quarter last year. Thirty analysts had a consensus revenue estimate of $720.89 million for the fourth quarter.

During the fourth quarter, Marvell repurchased about 34 million shares of its common stock for a total of $283 million.

The company also said it plans to pay its next quarterly dividend of $0.06 per share on April 4 to all shareholders of record as of March 14.

Looking forward to the first quarter, the company forecast revenue of $700 million to $740 million, earnings per share of $0.04, plus or minus $0.02, and adjusted earnings per share of $0.14, plus or minus $0.02.

Analysts currently expect the company to earn $0.13 per share on revenue of $707.82 million for the first quarter.

by RTTNews Staff Writer

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