Marvell Technology Earnings: Beats Net Income Estimate

The Cheat Sheet

Marvell Technology Group Ltd. posted a decrease in profit as revenue declined. Marvell Technology Group is a global semiconductor provider of analog, mixed-signal, digital signal processing, and embedded microprocessor integrated circuits.

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Marvell Technology Group Earnings Cheat Sheet for the Fourth Quarter

Results: Net income for Marvell Technology Group Ltd. fell to $80.7 million (13 cents per share) vs. $222.9 million (33 cents per share) a year earlier. This is a decline of 63.8% from the year-earlier quarter.

Revenue: Fell 17.5% to $742.7 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: Marvell Technology Group Ltd. reported adjusted net income of 21 cents per share. By that measure, the company beat the mean estimate of 12 cents per share. Analysts were expecting revenue of $740.3 million.

Quoting Management: “Fiscal year 2012 was a challenging year for Marvell in which we endured not only a choppy macro-economic environment but also the effects of an earthquake, massive floods, and product transitions at one of our largest customers. In spite of these challenges, Marvell delivered excellent profitability and free cash flow margins while simultaneously increasing our investments for several new initiatives,” said Dr. Sehat Sutardja, Marvell’s Chairman and Chief Executive Officer. “During fiscal 2012, Marvell was successful in several new products and initiatives. Our China TD business is now producing tangible results, our SSD revenue has exceeded expectations and our networking business is growing due to new products and share gains. As a result of these new initiatives and the recovery in the hard disk drive industry, we expect to see steady improvement in each of our end markets in the new fiscal year.”

Key Stats:

The company has now seen net income fall in each of the last four quarters. In the third quarter, net income fell 23.7% while the figure fell 12.5% in the second quarter and 28.6% in the first quarter.

Last quarter was the fifth in a row that the company saw shrinking gross margins, as they fell 4.6 percentage points from the year-earlier quarter to 54.1%. Over that time, margins have contracted on average 2.2 percentage points per quarter on a year-over-year basis.

The company beat estimates last quarter after meeting expectations in the third quarter with net income of 35 cents per share.

Revenue has declined for two quarters in a row. In the third quarter, revenue declined 0.9% to $950.4 million from the year-earlier quarter.

Looking Forward: Over the last 30 days, analysts have not been optimistic about the company’s next-quarter performance. The average estimate for the first quarter of the next fiscal year is now 14 cents per share, down from 16 cents. The average estimate for the fiscal year is now $1.04 per share, down from $1.09 sixty days ago.

(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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To contact the reporter on this story: Derek Hoffman at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com

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