Wed, Aug. 26, 5:35 PM
Thu, Aug. 20, 9:21 AM| Thu, Aug. 20, 9:21 AM | 2 Comments
Wed, Aug. 19, 5:35 PM
Thu, Aug. 6, 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.
Wed, Aug. 5, 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.
Tue, Aug. 4, 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.
Fri, Jul. 17, 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.
Mon, Jul. 13, 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.
Mon, Jul. 13, 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
Mon, Jul. 13, 10:00 AM
- Marvell (NASDAQ:MRVL) has popped thanks to a vague rumor state-owned Chinese investment firm PDSTI has offered to buy the company.
- This isn't the first time Marvell has jumped on a rumor of Chinese buyout interest. China has been aggressively acquiring chip industry assets over the last 12 months.
- Update: Sources tell dealReporter Marvell has seen interest from PDSTI.
Thu, Jun. 25, 5:35 PM
Thu, Jun. 18, 11:12 AM
- Noting FY16 (ends Jan. '16) EPS estimates have been cut by ~50% over the last 7 months and that Chinese phone sales "improved somewhat" in May, Goldman's Mark Delaney has upgraded Marvell (NASDAQ:MRVL) to Neutral, and hiked his target by $2 to $14.
- Delaney believes mobile baseband ASP/share pressure, SSD controller share loss, and PC hard controller inventory draw-down are priced in. He also expects chip industry M&A to improve pricing.
- At the same time, he argues investor focus will now turn to two issues deemed "difficult to gauge": Whether Marvell will find a strategic option for a baseband unit estimated to burn $100M-$200M/year in cash and hurt annual EPS by $0.20-$0.40, and the outcome of Marvell's Carnegie Mellon lawsuit appeal.
- Morgan Stanley upgraded to Overweight last month following Marvell's mixed FQ1 results and soft FQ2 guidance, and Citi started at Sell.
Tue, Jun. 16, 5:38 PM
Fri, May 29, 11:06 AM
- Believing the company is unlikely to unload its money-losing mobile baseband chip unit (as sought by many on the sell-side), Citi's Atif Malik has launched coverage on Marvell (MRVL -1.9%) with a Sell rating and $13 target.
- Malik: "We do not view MRVL as a viable long-term cellular baseband provider in 4G handset market given fierce pricing competition… and weak positioning at flagship handset makers." He forecasts slow growth in 2015/2016. "After outgrowing the chip industry over? the last ten years by 5 percent, we model MRVL's revenue growth to decelerate and underperform the industry by 3 percent in the next 2-3 years."
- The upgrade arrives 8 days after Marvell provided light FQ2 guidance, and 3 days after Morgan Stanley went contrarian and upgraded to Overweight. Among other things, MS cited optimism about Marvell's Final-Level Cache (FLC) tech, which the company hopes to apply to its mobile processors (among other products).
- Shares joined other chip stocks in rallying this week on hopes Marvell rival Broadcom's merger with Avago will spark more industry M&A.
Wed, May 27, 5:41 PM
Tue, May 26, 9:34 AM
- Believing its risk/reward has become more favorable, Morgan Stanley has upgraded Marvell (MRVL +1.7%) to Overweight 4 days after shares tumbled due to the company's soft FQ2 guidance, and hiked its target by $2.50 to $17.50.
- MS (like others on the sell-side) argues Marvell's earnings would receive a boost if the company exited the mobile baseband processor market - Nvidia became the latest firm to exit earlier this month. It's also upbeat about Marvell's Final-Level Cache (FLC) tech, which places an SSD within a computer's main memory and thereby aims to cut the amount of DRAM needed by a system (inc. mobile devices).
- On its FQ1 CC (transcript), Marvell claimed FLC can allow a hard drive to perform like an SSD 99.9% of the time. "Using this technology, we can now build a 1 terabyte consumer hybrid drive with FLC cache for only $40 of bill of material compared to a 1 terabyte SSD which would otherwise cost $300 of bill of material ... it is not a matter of if but a matter of when the HDD industry adopts our FLC technology to power all of their hard drives." Shipments are expected to start in early 2016.
- MS on FLC's impact on Marvell's baseband ops: "Our view is that the push around the new technology clarifies the management decision-making progress, and is the reason management has been expressing guarded optimism despite more flexible language on long term investment ... if FLC fails to make a difference, we expect the company to cut back investment."
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