Marvell Beats Analysts on Q1 Earnings, Q1 Sales and Q2 Outlook

Andrew Klips  |

Marvell Technology Group ( MRVL) reported earnings for the first quarter of fiscal 2014 after Thursday’s closing bell showing the chipmaker’s profits plunged, but not as much as analysts had expected.

Total sales for Santa Clara, California-based Marvell during the quarter ended May 4 was $734 million, 8 percent lower than $796 million in the year prior quarter. Net income for the quarter was $53 million, or 11 cents per share, versus $95 million, or 16 cents per share in the first quarter of fiscal 2103. Adjusted profits, which exclude one-time items and share-based compensation, totaled $98 million, or 19 cents per share, compared to $139 million, or 23 cents per share in last year’s quarter.

Wall Street was anticipating a greater decline, expecting adjusted EPS of 14 cents per share on revenue of $721.6 million.

Earlier this year, Marvell guided EPS in the range of 12 cents to 16 cents per share on revenue between $700 million and $740 million.

Gross margin widened slightly to 54.3 percent, compared to 54.0 percent in Q1 fiscal 2013. Quarter-over-quarter, gross margin was up from 52.2 percent.

Marvell bought-back about 20 million shares for an aggregate amount of $200 million in the first quarter. In the past 11 quarters, the company has bought back about 29 percent of its common shares.

The company said it intends to pay a quarterly dividend of 6 cents per share on July 3 to shareholders of record as of June 13.

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“Our results in the first quarter were at the high-end of our guidance mainly due to better than normal seasonal demand and share gains in our storage and networking end markets,” said Dr. Sehat Sutardja, chairman and chief executive at Marvell. Sutardja added that the company expects its investments and key initiatives across all of its end markets to produce tangible results, starting this quarter.

Looking ahead, Marvell said it sees second-quarter revenue in the range of $770 million to $810 million. GAAP earnings are expected between 7 cents and 11 cents per share. Adjusted EPS is expected between 17 cents and 21 cents.

Analysts were expecting adjusted EPS of 18 cents and revenue of $763 million.

The company said that its outlook does not include the potential impact of several factors, such as share repurchases, asset acquisitions or pending litigation. Marvell was highlighted in December in a patent infringement case versus Carnegie Mellon University in which the jury awarded the school a judgment of $1.17 billion in damages.

Marvell, who made its name selling parts for hard disks used in PC’s and laptops, has been taking a hit with steadily declining sales of personal computers. Shifting its attention to capitalize on the burgeoning mobile industry, lackluster performance by major mobile client BlackBerry (BBRY) has not helped, although after hitting nearly four-year lows in January, the stock price has performed very well.


In the last year, shares are off by about 13 percent through Thursday’s close at $11.31. So far in 2013, however, shares of MRVL are up about 56 percent and may open even higher tomorrow if the 7-percent surge in extended trading holds following the better-than-expected earnings report. 

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