Post Earnings Coverage as Marvell Technology Back in Black on Lower Costs

LONDON, UK / ACCESSWIRE / September 8, 2016 / Active Wall St. announces its post-earnings coverage on Marvell Technology Group Ltd. (NASDAQ: MRVL). The company posted its second quarter fiscal 2017 results on September 02nd, 2016. The Hamilton, Bermuda-based Semiconductor Company swung to a profit; however, revenue declined more than expected. Register with us now for your free membership at: http://www.activewallst.com/register/.

Today, AWS is promoting its earnings coverage on MRVL. Get our free coverage by signing up to http://www.activewallst.com/registration-3/?symbol=MRVL.

Earnings Reviewed

For the reported quarter, Marvell reported profit of $51.30 million, or $0.10 per share, compared to a loss of $771.94 million, or $(1.49) per share, in the year earlier quarter. Excluding stock-based compensation and other items, the company's adjusted earnings rose to $0.18 per share from $0.7 per share in Q2 FY16, topping analysts' estimate of $0.11 per share. Revenue decreased 12% to $626.40 million. The reported figure also missed market expectations of $629.96 million.

"We experienced a seasonally strong second quarter, driven by solid demand from customers across storage, networking, and wireless end markets," said Matt Murphy, President and CEO.

The company attributed the rise in earnings per share to the lower spending in Q2 FY17. Marvell's Cost of Goods Sold was $287.60 million, down from $461.719 million in Q2 FY16. The company's general and administrative expenses was down 95% to $37.17 million from $691.22 million in the year ago quarter.

"We are also beginning to see the benefits of improved focus on product cost as well as a more disciplined approach to spending, which resulted in better than expected earnings per share," Mr. Murphy added.

Quarter Details

During Q2 FY17, Marvell's storage revenues increased 13% sequentially, primarily due to higher HDD (Hard-Disk Drive) and SSD (Solid-State Drive) demand. The networking business increased 12% in Q2 FY17 compared to the previous quarter on the back of strong demand in enterprise networking business. Mobile and wireless revenue grew 21% sequentially, mainly driven by seasonal ramps of high-end consumer products. However, Mobile platform revenue declined to $9 million in Q2 Y17 from $22 million in the previous quarter, reflecting the anticipated decline, due to the restructuring actions announced on September 24, 2015.

Gross Margin

For Q2 FY17, Marvell's gross margin was 54.1% versus 35% in Q2 FY16. The gross margin in the previous year quarter was negatively impacted by $14 million inventory write-down, related to restructuring of the mobile platform business and the higher mix of lower-margin mobile platform revenue, as well as the $79 million charge related to royalties paid in connection with the CMU settlement.

Financials

As of July 30, 2016, Marvell had cash, cash equivalents, and short-term investments of $1.62 billion. The company carries no long-term debt. Net cash provided from operations in the second quarter was $59 million.

During Q2 FY17, Marvell paid $30.67 million in the form of dividend to its shareholders.

Outlook

For Q3 FY17, Marvell is forecasting earnings in the range of $0.8 per share to $0.13 per share, below projections of $0.14 per share. Revenue in the current quarter is expected to be flat to down 4%. Analysts are expecting revenue to fall 5%.

Stock Performance

On Wednesday, September 07, 2016, Marvell Technology's shares closed the trading session at $12.63, slipping 2.40%. Volume for the day was at 7.48 million shares, which was higher than the 3 months average volume of 6.36 million. In the last one month and previous 3 months, the stock advanced 10.69% and 24.80%, respectively. Moreover, since the start of the year, the company's shares gained 44.88%. The stock has a dividend yield of 1.90%.

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SOURCE: Active Wall Street