Earnings Preview: Marvell Technology Group

| About: Marvell Technology (MRVL)

Marvell Technology Group (NASDAQ:MRVL) is expected to report Q4 earnings after the market close on Thursday, March 4 with a conference call scheduled for 4:45 pm ET.


The consensus estimate is 37c for EPS and $841.82M for revenue, according to First Call. Guidance provided by management on the last earnings call is for Q4 EPS of 33c-39c on $820M-$850M in revenue.

Analyst Views

Credit Suisse's Q4 estimates of 36c on $835M in revenue are in-line with guidance and Street estimates. The firm believes Marvell can deliver upside to their estimates driven by a stronger rebound in Networking, which is 21% of revenues, and which was guided up mid-high single digits percent quarter-over-quarter. Marvell's peers have reported 18% q/q CQ4 growth for Networking. Another reason for the upside could be that CQ4 HDD industry units are up 19% q/q vs. Credit Suisse's 6% estimate for Marvell Q4 HDD revenues. Lastly, better than expected Wireless results, which is 27% of revenues, could beat Marvell’s guidance for mid-to-high single digits decline. Marvell's peers have reported only a 1% q/q Wireless decline. Credit Suisse estimates a possible 2c-4c upside to their 36c estimate. Looking ahead to Q1: Credit Suisse is modeling 29c on $780M, down 7% q/q, vs. consensus of 32c on $797.73M in revenue. While management may guide conservatively, Credit Suisse believes upside to their estimates could come from continued momentum in Networking and HDD unit strength. Competitors Western Digital (NYSE:WDC) and Segate (NASDAQ:STX) have guided to flat/down 5% HDD units in CQ1 vs. Credit Suisse's estimate of down 7% for Marvell HDD revenues. Marvell is modeling 150bps q/q GM erosion from Q4's peak of 58.2% based on volume and mix.