Marvel Institutes Global Cost-Cutting Plan

With Wednesday’s news that Marvell Technology (MRVL) is planning to fire 100 Israeli workers, as part of a global cost-cutting plan, it appears that this hi-tech firm is going to be the Grinch that steals Hanukkah.

Marvell designs chips used in hard-disk drives, mobile phones, Wi-Fi functional electronics and Internet networking gear. The company has been embroiled in its own options backdating scandal, and has been focused on getting its financial house in order.

Marvell posted a loss of $6.4 million, or a penny a share, on revenue of $758.2 million for the third quarter that ended on Oct. 27. During the same period a year ago, the chip-maker earned $6 million, or a penny a share, on revenues of $520.4 million.

Notable Calls has an interesting analysis of where they think the stock is going. I think that at these levels - $15 a share - it makes for an interesting contrarian investment. Marvell is taking steps to improve its margins, and along with the cost-cutting, it appears to be in the process of getting its ship in order. There is no question that it has taken more time then many investors would have hoped for but, while these numbers weren’t of the blowout variety, they weren’t terrible, either.

It is also important to keep in mind its relationship with Apple (AAPL). Marvell is currently supplying the Wi-Fi- chip in the iPhone, and many analysts are predicting that it will grow the Apple relationship, especially for the next-generation video iPod player. This just might be the catalyst for a great turnaround.

Disclosure: The author has a position in MRVL, but holds no position in any other stock mentioned, as of November 28, 2007.