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Ahead of the Bell: Marvell Technology

NEW YORK (AP) -- Shares of Marvell Technology Group Ltd. rose more than 5 percent before Friday's opening bell after the chipmaker issued an optimistic outlook for the current quarter along with solid fiscal fourth-quarter results.

The Santa Clara, Calif.-based company predicted an adjusted fiscal first-quarter profit of 12 cents to 16 cents per share on revenue of between $700 million and $740 million. Analysts, on average, expect a profit of 13 cents per share on $708.2 million in revenue, according to FactSet.

For the fiscal fourth quarter, which ended on Feb. 2, Marvell reported net income of $50.2 million, or 9 cents per share. Excluding one-time items, the company said it posted an adjusted profit of 19 cents per share. Revenue rose 4 percent to $775.3 million.

Analysts, on average, expected earnings of 13 cents per share on $720.9 million in revenue.

Marvell said fiscal 2013 was a tough year for the company, as an industrywide drop in demand for hard disk drives offset market share gains. Meanwhile, demand from networking markets was flat and the company dealt with a product transition at its mobile division.

But Marvell said it expects things to improve this year, as it continues to pick up market share and its mobile division begins to grow again.

Analysts said they were pleased with the fourth-quarter results, but were skeptical about how much the company could improve this year.

Benchmark analyst Gary Mobley backed his "Hold" rating for the stock, saying that despite the strong results, the company still lacks something compelling to spur long-term growth. While the shares could experience a near-term rally, investors shouldn't be too eager given Marvell's high exposure to the hard disk drive and personal computer markets, he said.

Citi analyst Glen Yeung backed his "Neutral" rating, but boosted his price target for Marvell by $2 to $10.50. He said the company's long-term success depends on growth in the mobile and wireless markets, adding that he's skeptical about how much market share Marvell can pick up in that area.

Marvell shares added 53 cents, or 5.6 percent, to $10 in premarket trading. Its shares peaked at $16.31 almost a year ago, and fell as low as $6.98 in late December.