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Mark Hartner

 
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  • Marvell Pre-Announces: No Near-Term Catalyst To Support Long-Term Value [View article]
    Ashraf, I have been following your articles and appreciate your candid analysis, we may have a bit in common. I am a Computer Engineering graduate with about 8 years in the industry, and enjoy doing stock analysis. I have also been long MRVL, but sold today. I would like to share some of my own analysis with you.

    Revenues at Marvell have been basically flat for the past 3 quarters (800M +/- 3%), and the entire industry has been struggling this last quarter. I don't think Marvel's revenue drop alone is enough to justify the departure of their CFO.

    I used the departure of their CFO as an excuse to take a deep dive into their most recently filed 10Qs. One thing I noticed was that there were some important changes in their 10Qs related to their upcoming patent trial with CMU on November 27th. Search Marvell's two most recently filed 10Q's for "Carnegie Mellon Litigation", and also take a look at http://bit.ly/VdjBrn

    In relation to the CMU litigation, you will notice that in their most recently filed 10Q Marvell removed the language stating that they "cannot determine the likelihood of loss nor estimate a range of possible loss", and buried way down in the footnotes on page 35, in a totally unrelated section, Marvell added the following language "CMU has alleged that it is entitled to damages in the amount of approximately $735 million through March 2010 as a result of the alleged infringement". Although I admire the wizardy of Marvell's management in being able to bury important information deep in the footnotes of their financial statement, I don't see this as particularly shareholder friendly.

    If you read the docket, you will see that the patents in question relate to error-correcting codes for magnetic media. These types of codes are at the heart of Marvell's HD controllers. They are presumably part of what allows Marvell to achieve the high Gigabyte per platter density frequently touted during their conference calls. HD controllers have been Marvell's bread and butter for many years, so this lawsuit goes right to the core of their business.

    Long-term, I think Marvell could be a great investment, but I am going to sit it out until December and see how things unfold. The upcoming patent trial and related publicity does not bode well for Marvell's stock price, and I don't think the current share price reflects the risks of this trial. I would also like to see more "color" (as the analysts would put it) around the departure of their CFO.
    Oct 19 05:32 PM | 8 Likes Like |Link to Comment
  • Marvell Pre-Announces: No Near-Term Catalyst To Support Long-Term Value [View article]
    Ashraf, I have been following your articles and appreciate your candid analysis, we may have a bit in common. I am a Computer Engineering graduate with about 8 years in the industry, and enjoy doing stock analysis. I have also been long MRVL, but sold today. I would like to share some of my own analysis with you.

    Revenues at Marvell have been basically flat for the past 3 quarters (800M +/- 3%), and the entire industry has been struggling this last quarter. I don't think Marvel's revenue drop alone is enough to justify the departure of their CFO.

    I used the departure of their CFO as an excuse to take a deep dive into their most recently filed 10Qs. One thing I noticed was that there were some important changes in their 10Qs related to their upcoming patent trial with CMU on November 27th. Search Marvell's two most recently filed 10Q's for "Carnegie Mellon Litigation", and also take a look at http://bit.ly/VdjBrn

    In relation to the CMU litigation, you will notice that in their most recently filed 10Q Marvell removed the language stating that they "cannot determine the likelihood of loss nor estimate a range of possible loss", and buried way down in the footnotes on page 35, in a totally unrelated section, Marvell added the following language "CMU has alleged that it is entitled to damages in the amount of approximately $735 million through March 2010 as a result of the alleged infringement". Although I admire the wizardy of Marvell's management in being able to bury important information deep in the footnotes of their financial statement, I don't see this as particularly shareholder friendly.

    If you read the docket, you will see that the patents in question relate to error-correcting codes for magnetic media. These types of codes are at the heart of Marvell's HD controllers. They are presumably part of what allows Marvell to achieve the high Gigabyte per platter density frequently touted during their conference calls. HD controllers have been Marvell's bread and butter for many years, so this lawsuit goes right to the core of their business.

    Long-term, I think Marvell could be a great investment, but I am going to sit it out until December and see how things unfold. The upcoming patent trial and related publicity does not bode well for Marvell's stock price, and I don't think the current share price reflects the risks of this trial. I would also like to see more "color" (as the butt-kissing analysts would put it) around the departure of their CFO.
    Oct 19 04:23 PM | 6 Likes Like |Link to Comment
  • Marvell Lawsuit: Don't Worry, It Gets Worse [View article]
    My take on LSI is that they probably infringe, but that CMU is not going to go after them. My reasoning on that is that CMU filed their lawsuit against Marvell just ahead of the 6 year mark because Marvell would have had a good laches defense after the 6 year mark. Now that 9 years have passed, LSI would have a really good laches defense, so much it is much riskier for CMU.

    Again, I am not a lawyer, but I think of laches sort of like a "statute of limitations", but not quite as rock solid like it is for criminal law. For more on laches just look up the VRNG vs Google lawsuit and see what happened, the judge laches to knock the damages award down to almost nothing.

    I think there is a 0% chance of MRVL being prevented from selling their controllers and that Marvell will continue to dominate the HD Controller market.
    Jan 4 12:47 AM | 2 Likes Like |Link to Comment
  • Marvell: Is It Time To Throw In The Towel? [View article]
    You are exactly right, Marvell _could_ have argued a 8.8c per unit was more reasonable. The problem is that Marvell never made that argument in court. Instead, Marvell dug up old CMU licensing agreements that weren't really applicable to the case in an effort to convince everyone that a one-time $250k royalty was the proper amount. Marvell's damages expert failed miserably, and the jury was left with no alternative but to grant the 50c royalty CMU asked for.

    You are also exactly right, that our patent system is completely broken and will chase companies away from the US.
    Dec 28 08:37 PM | 2 Likes Like |Link to Comment
  • Marvell: Is It Time To Throw In The Towel? [View article]
    I just submitted my very first SA article per your suggestion. The article is on Marvell, but I am not sure how long it will take for it to show up since I am a new author. Please check it out when it comes out.
    Dec 27 12:39 PM | 2 Likes Like |Link to Comment
  • Marvell Lawsuit: Don't Worry, It Gets Worse [View article]
    In writing this article it was never my intent to get into gory legal details, or to speculate about what might happen during the appeals process. My intent was to let investors know what the lawsuit was about, and how the verdict could affect Marvell's bottom line.

    As tempted as I am to dive into the issues you raise in your comments, I am going to refrain. If anyone is interested in a response, I might consider writing it up in a blog entry.
    Jan 5 08:13 PM | 1 Like Like |Link to Comment
  • Marvell Lawsuit: Don't Worry, It Gets Worse [View article]
    I think Marvell has a lot of strengths. I was long Marvell until October.

    Marvell is an excellent technology company. They know where technology is going, and rather than chase the ball they run to where the ball is going to be. Look at TI, who just announced they were getting out of the mobile processor business. TI missed the ball by not being able to integrate wireless into OMAP. Marvell's CEO on the other hand has been saying for years that things were going to a single chip solution and dove headfirst into 3G/4G and Wifi. Marvell broke into 802.11 Wifi at a time when it was an oligopoly of Broadcom and Atheros (now owned by Qualcomm). Those are incredible accomplishments.

    I can only cover so much, and the area where I thought I could shed the most light was in the lawsuit.
    Jan 4 01:35 AM | 1 Like Like |Link to Comment
  • Marvell Lawsuit: Don't Worry, It Gets Worse [View article]
    Hannox, you are passionate and I like your style. I have read your comments on MRVL's FCF, and like you, I think FCF is a great metric.

    One thing that has been hard for me to wrap my head around is Marvell's FCF. Marvell dilutes their shares so quickly, it is as if they are paying their employees in stock. Compound that with their share buybacks, sharecount numbers that don't quite add up, and it is really hard for me to get a good FCF analysis. I am interested in any insight you could share on Marvell's FCF. This is why I punted in the article and said Marvell's share count/buyback/dilution needs an article of its own.
    Jan 4 01:19 AM | 1 Like Like |Link to Comment
  • Marvell Lawsuit: Don't Worry, It Gets Worse [View article]
    I know what without prejudice means. For my take on this, please see my response to Sirvasq above http://seekingalpha.co...

    Now a question for you. Why would you trust Marvell's press release?
    Jan 4 12:28 AM | 1 Like Like |Link to Comment
  • Marvell Lawsuit: Don't Worry, It Gets Worse [View article]
    I think you are probably correct.
    Jan 3 02:10 AM | 1 Like Like |Link to Comment
  • Marvell Lawsuit: Don't Worry, It Gets Worse [View article]
    I agree with you that the judge is not going to award treble damages, that would be insane.
    Jan 3 02:00 AM | 1 Like Like |Link to Comment
  • Marvell Lawsuit: Don't Worry, It Gets Worse [View article]
    You are correct, having less shares out there is a good thing. Not being able to explain why there are less shares outstanding is a bad thing.
    Jan 2 11:47 AM | 1 Like Like |Link to Comment
  • Marvell Lawsuit: Don't Worry, It Gets Worse [View article]
    The sentence you quoted above is my interpretation of CMU's claim.

    If you want to see what CMU was trying to claim, take a look at docket 708, which is kind of a powerpoint summary of CMU's arguments. The Judge did not allow CMU to use this powerpoint presentation in court (she said they had to do it the old-fashioned way), but it gives you a good idea of what they were trying to argue.
    Jan 2 11:35 AM | 1 Like Like |Link to Comment
  • Marvell Lawsuit: Don't Worry, It Gets Worse [View article]
    I am not a lawyer.

    I think the odds of a re-trial are very slim, just because Judge Fischer ruled against them on that motion, essentially saying that she would take it into consideration after the trial when looking at the damages award. Marvell's argument for a re-trial was that CMU had made some prejudicial closing arguments. The Judge let the trial continue to a verdict, but I think she may still us it against CMU as an excuse for not awarding any extra damages or to sanction the CMU's lawyers.

    I have no opinion on the odds of a reversal, I'll wait for the patent lawyers to chime in. I do think that it would take several years for such a reversal to happen.

    A settlement is also a tricky question. Both sides seem to have dug their heels in. I would also put the odds of a settlement very low.
    Jan 2 11:22 AM | 1 Like Like |Link to Comment
  • Marvell Lawsuit: Don't Worry, It Gets Worse [View article]
    0% chance of an injunction because CMU doesn't manufacture anything. If it were LSI suing Marvell, then yes I could see an injunction. LSI could argue that they were losing market share to Marvell.

    CMU doesn't get hurt when Marvell manufactures allegedly infringing chips.
    Jan 7 11:58 PM | Likes Like |Link to Comment
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