Marvell 3Q Earnings Fall 24 Percent
Marvell Technology Group Ltd (NASDAQ:MRVL) said on Friday that its third fiscal quarter net earnings fell 24 percent, on account of poorer revenue as the company warned it will be impaired in the near term as a result of severe floods in Thailand.
Marvell, the Santa Clara, Calif based chip maker, posted its fourth fiscal quarter results just slightly below analyst estimates and said will recover by mid next year the hard disk drive manufacturer which is presently hurt due to floods.
Sehat Sutardja, Chief Executive of the Marvell, said during a conference call that the company is very flexible and has so far handled many challenges. Adding on he said that the industry is confident and will bounce back from the flood hit and start budding again.
Marvell makes chips and parts for, networking equipment, hard disk drives and cell phones has been posting improved results lately as demands for its phone processors grow in China. The company from the storage market generates nearly half of its revenue, however severe floods in Thailand are disrupting hard drive manufacturing and affecting major customers such as Western Digital Corp. In the coming month hard drive supply shortages are expected as a result of the floods. The floods have also affected auto manufacturers such as Toyota and others.
The flooding will push the industry to speed up adoption of complicated hard drive technologies that support similar storage capacities to be shipped using smaller amounts of components experiencing shortages, said Sutardja on Thursday. Adding on he said that companies will ship more solid state drives that use Marvell components.
Marvell said, as a result of flooding, its storage revenue is expected to be down 20 percent to 30 percent sequentially in the current quarter. Clyde Hosein, Chief Financial Officer of Marvell, said about 10 percent to 15 percent of the industry’s lost capacity should be recovered in the current quarter ending January, while half should be recovered in the first quarter next year and the remaining during Marvell’s July quarter.
Overall for the fourth quarter earnings of 21 cents to 25 cents were posted, slightly below analyst expectations of 26 cents. Revenue was projected to be $775 million to $825 million, compared with analyst expectations of $821.3 million. The news boosted shares 3.9 percent to $14.30 in afterhours trading. Shares have dropped 27 percent over the past 1 year through Thursday’s closing.
Post Written By: Ed Liston
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht. |