Marvell Technology Group Ltd. (MRVL) on Thursday reported a 36 percent decline in first-quarter profit, reflecting lower revenues and weak margins. Nevertheless, both earnings and revenue beat analysts' estimates.
The chipmaker also initiated a quarterly dividend and boosted its share buyback program by $500 million. Shares of the company gained 3 percent in extended trading.
Dr. Sehat Sutardja, Marvell's Chairman and Chief Executive Officer said, "Our results in the first quarter were better than anticipated driven in part by our TD smartphone products, which grew about 25% sequentially and increased deployment of our 500 gigabyte per platter mobile storage solutions to all the hard disk drive manufacturers."
Sutardja added, "This financial performance gave us the confidence to increase our share repurchase program by $500 million to a total of $2.5 billion, and based on broad institutional shareholder request, to also initiate a quarterly dividend of 6 cents per share."
The Hamilton, Bermuda-based company's first-quarter net income was $94.54 million or $0.16 per share, down from $146.86 million or $0.22 per share in the year-ago period.
Adjusted net income declined to $138.66 million or $0.23 per share from $189.30 million or $0.29 per share in the prior-year quarter.
On average, 30 analysts polled by Thomson Reuters expected the company to earn $0.20 per share for the quarter. Analysts' estimates typically exclude special items.
Total revenues for the quarter edged down less than 1 percent to $796.35 million from $802.40 million in the prior-year quarter, but beat analysts' consensus estimate of $768.69 million.
Gross margin decreased to 54.0 percent from 58.5 percent in the year-ago quarter.
In a separate press release, Marvell Technology declared its first quarterly dividend of $0.06 per share, payable on July 11 to shareholders on record June 21.
Marvell also boosted its existing share buyback plan by an additional $500 million.
The company has repurchased approximately $1.7 billion of its previously authorized $2 billion program, leaving about $348 million remaining in the current repurchase program.
The company noted that with the new $500 million authorization, its total share repurchase program increases to $2.5 billion and the amount remaining to $848 million.
In a separate press release, Marvell said that China's mobile OEM K-Touch's first Time Division Synchronous Code Division Multiple Access or TD-SCDMA smartphone, T660, features Marvell's 1 GHz PXA920H single-chip communications processor.
The T660 will be available on China Mobile, China's largest carrier with more than 650 million subscribers.
In a conference call, Marvell said it forecasts adjusted earnings for the second quarter in a range of $0.26 to $0.30 per share on revenue of $840 million to $890 million. Analysts expect earnings of $0.27 per share for the quarter on revenue of $854.13 million.
MRVL closed Thursday's trading at $13.30, down $0.26 or 1.92 percent on a volume of 14.60 million shares. In after-hours, the stock gained $0.40 or 3.01 percent to $13.70.
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