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Sep. 24, 2015, 4:31 PM
- The restructuring of the mobile business - which includes a 17% cut in headcount - is expected to save $170M-$200M annually.
- The work will begin immediately, and most of the activity will take place through the end of this fiscal year. The company expects to incur charges of $100M-$130M.
- Marvell's (NASDAQ:MRVL) mobile unit earned about $13M on revenue of $122M in the first half of fiscal 2016.
- Shares +8.6% after hours
Sep. 14, 2015, 1:29 PM
- Morgan Stanley's Joseph Moore has downgraded Marvell (MRVL -3.1%) to Equal Weight three days after the company disclosed an accounting probe related to internal controls and FQ2 revenue recognition, and reported FQ2 sales of $711M (below a $722M consensus). Brean and Susquehanna downgraded to neutral ratings on Friday.
- Moore: "We knew this was a turnaround requiring patience, and were prepared for business to be difficult in light of ongoing weakness in PCs, but the accounting shortcomings are surprising and concerning" He notes the disclosure suggests Marvell has been boosting quarterly sales by pulling them forward a quarter, and expects its audit committee to put more conservative policies in place. "Combined with weaker industry demand, this implies heightened earnings uncertainty and risk for MRVL. Further, we see risk of incremental negatives such as shareholder lawsuits and SEC action."
- Susquehanna's Chris Caso: "We consider the stock to be unownable during such an investigation, and it will likely take a considerable amount of time for investors to regain confidence in management ... Our thesis on the stock had assumed value in MRVL if it were to spin or exit its handset related business, and focus on the core high cash flow business. Management unfortunately hasn’t acted to unlock that value..."
- Brean's Mike Burton: "We believe that in addition to the market weakness in PCs and Mobile, that Marvell’s businesses have been under competitive pressure. The PC market, which Marvell called out in its preliminary report as a reason for an additional 7-8% cut in numbers, is facing significant headwinds as HDDs are seeing increasing competition from SSDs and MRVL is facing more competition in SSDs. "
- Shares are down 19% since Marvell's disclosure.
Sep. 11, 2015, 12:44 PM
Sep. 11, 2015, 9:11 AM
Sep. 11, 2015, 8:25 AM
- Releasing preliminary FQ2 results, Marvell Technology (NASDAQ:MRVL) says its Audit Committee is investigating certain revenue recognition issues this past quarter, and whether management's style resulted in an open flow of information and communication to create an effective control environment.
- The focus is on about 7-8% of revenue recognized in FQ2 that would have been received and earned in FQ3, but is now no longer available for receipt this quarter. This percentage would be indicative of softening demand for certain company products, particularly in the storage end market.
- As a result of the probe, the company will be late in filing its 10-Q.
- As for preliminary results, FQ2 revenue of $711.3M vs. $961.5M a year ago. Operating loss of $400M vs. profit of $120.4M a year ago. GAAP loss per share of $0.74 vs. income of $0.27 a year ago.
- Shares -13.75% premarket
Sep. 8, 2015, 1:19 PM
- Though the Philadelphia Semi Index is up 3.4% on a good day for equities, Marvell (MRVL -0.4%) is off slightly following a downgrade to Neutral from JPMorgan.
- The firm observes Marvell's revenue growth has underperformed the chip industry's in recent quarters. It's also uncertain about management's willingness to abandon its unprofitable mobile baseband processor unit, and is worried about "potential growth headwinds" for Marvell's storage (hard drive/SSD controller) and networking chip businesses.
- Marvell is 3 weeks removed from postponing its FQ2 report to give itself more time to finalize its numbers. No make-up date has yet been announced.
Sep. 2, 2015, 5:35 PM
Aug. 26, 2015, 5:35 PM
Aug. 20, 2015, 9:21 AM
- Marvell (NASDAQ:MRVL) has postponed the release of its FQ2 report, previously set for this afternoon, to "allow for more time to finalize its quarterly financial results." The company will announce a new date at some point in the future.
- Shares -1.8% premarket to $11.70. The 52-week low is $11.65.
Aug. 19, 2015, 5:35 PM
Aug. 6, 2015, 9:53 AM
- Qualcomm (QCOM -0.5%), via its Atheros Wi-Fi/connectivity chip unit, is buying DSL modem/infrastructure IC and home gateway processor vendor Ikanos (NASDAQ:IKAN) for $2.75/share, or roughly $47M based on Ikanos' Q2 diluted share count. The price represents a 57% premium to Ikanos' Wednesday close. The deal is expected to close by year's end.
- Ikanos' products complement Qualcomm/Atheros home Wi-Fi and wireline networking offerings. Qualcomm: "The combination of Qualcomm Atheros' broad home gateway IP portfolio, including Wi-Fi, powerline, small cell, and Ethernet switch technologies, and Ikanos' advanced wired modem technology, is designed to create a complete solution for a wide range of home gateway products to better serve the carrier segment." Broadcom (NASDAQ:BRCM) and Marvell (NASDAQ:MRVL) are among the other companies competing in this space.
- Qualcomm CEO Steve Mollenkopf suggested last week his company would make new chip acquisitions.
Aug. 5, 2015, 11:22 AM
- Citi has upgraded Marvell (NASDAQ:MRVL) to Neutral a day after a federal appeals court (the CAFC) cut the infringement award levied against the company in a Carnegie Mellon suit to $278M from $1.54B. The firm had launched coverage at Sell in late May, calling the company a value trap.
- The CAFC agreed Marvell infringed CMU's patents, as well as a Pennsylvania jury's ruling that Marvell owed $0.50 for each infringing hard drive controller chip sold in the U.S. However, it threw out a 23% enhanced damages increase to the original jury award, and stated a new trial is needed to decide if royalties are owed on chips that never enter the U.S. Many tech companies are pleased with the latter decision.
Aug. 4, 2015, 10:15 AM
- A federal appeals court (the CAFC) has upheld a Pennsylvania jury's ruling that Marvell (MRVL +0.4%) infringed hard drive controller patents owned by Carnegie Mellon, but has excluded enhanced damages and foreign chip sales.
- As a result, the infringement award has been slashed to $278M from the $1.54B set last year, following a $1.17B 2012 jury verdict. Marvell initially spiked higher on the news, but has quickly pared its gains.
Jul. 17, 2015, 4:16 PM
- Not content with its recent ~$37B cash/stock deal to merge with Broadcom (BRCM +0.2%), acquisition-hungry Avago (AVGO -0.8%) is looking to bid for Broadcom rival Marvell (MRVL +0.5%), "a reputable source" tells Light Reading.
- Marvell moved slightly higher following the report. With a current $6.7B market cap - a deal could require a price above $8B - Marvell would be a relatively easy fish to swallow. However, its product line overlaps with Broadcom's in the Ethernet transceiver, Ethernet switching chip, and Wi-Fi/Bluetooth combo chip markets (among other areas), and the Ethernet overlap could result in antitrust scrutiny.
- There has been speculation Avago isn't done with its buyout binge. The company snapped up LSI, PLX Technology, and Emulex prior to the Broadcom deal, and has a good track record of reaping major cost synergies from acquisitions.
- Meanwhile, Marvell has been viewed as a potential acquisition target as the chip industry continues consolidating. Shares rose earlier this week on a report of buyout interest from state-owned Chinese firm PDSTI.
Jul. 13, 2015, 4:32 PM
- "When the company announced a confusing merger with Alcatel-Lucent ... we used the opportunity to exit with a healthy gain," writes David Einhorn in his Q2 letter, explaining Greenlight Capital's unloading of its Nokia (NYSE:NOK) position.
- Regarding his decision to exit EMC, Einhorn cites "the reduced odds of any favorable change to the corporate structure and increasing concerns about a lack of growth in the storage business." EMC is 4 months removed from formally stating it doesn't plan to spin off its 80% VMware stake.
- Regarding Marvell (NASDAQ:MRVL), a position held for years, Einhorn cites weak PC demand as a reason for exiting following a 15% compounded annual return. His disclosure comes on a day Marvell rose 5.4% thanks to a report of buyout interest from a Chinese investment firm.
- Echoing the bullish arguments he has made for rival Lam Research (NASDAQ:LRCX), Einhorn says he took a small position in Applied Materials (NASDAQ:AMAT) out of a belief AMAT's core etch/deposition equipment markets will outgrow the broader chip equipment industry "due to the increased use of 'multi-patterning' to produce chips at geometries below [20nm]." He predicts results will improve as management turns its attention from the abandoned Tokyo Electron merger towards "growth and cost savings opportunities." With Einhorn's help, AMAT rose 2.9% today.
- "It's a cyclical business and, regrettably, we missed the turn of the cycle," says Einhorn about Micron (NASDAQ:MU), Greenlight's biggest Q2 loser. However, he still thinks the DRAM industry is acting more rationally following consolidation, notes shares trade at "less than 12x annualized trough earnings and less than 5x prior peak earnings," and predicts future cycles will have higher peaks and troughs.
- Over the long run, Einhorn expects Micron ($19.1B market cap) to be worth more than Netflix (NFLX - $42.9B market cap), whose recent surge he considers quite unjustified. "In today's market, the best performing stocks are companies with exciting stories where accountability is in the distant future." He adds Season 3 of House of Cards "appeared to be scripted to compete with Ambien,"
- Worth noting: While Einhorn has a good track record going long, his short picks have been more hit-and-miss.
Jul. 13, 2015, 11:33 AM
- Sources have told dealReporter Marvell (MRVL +4%) has received buyout interest from Chinese investment firm PDSTI.
- Cowen's Tim Arcuri (Outperform, $18 target): "While we think there is underlying truth to a deal being in the works, the idea that the entire company would be acquired seems a stretch to us." He continues to expect a deal for an equity stake in Marvell's mobile baseband chip unit (believed to be losing money, depends heavily on Chinese sales) rather than a full-blown buyout.
- Earlier: Marvell jumps on Chinese M&A rumor
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