Tue, Mar. 3, 12:39 PM
- BofA/Merrill's Wamsi Mohan has reinstated coverage on Seagate (STX -5.4%) with an Underperform rating and $50 target, and on Western Digital (WDC -3.3%) with a Neutral rating and $117 target.
- Mohan is worried Q1 and Q2 hard drive demand (i.e. TAM) is tracking below expectations. With regards to Seagate, he's also worried about its relatively high PC exposure (especially for business PCs), SSD cannibalization risk in both the client and (high-margin) performance hard drive segments, and potential conflicts with OEM customers from Seagate's systems business (stems from the Xyratex acquisition).
- Though worried about Western's exposure to the same TAM issues as Seagate, Mohan is relatively positive on the company due to its "solid" SSD position (partly the result of acquisitions) and strength in the growing high-capacity enterprise drive segment (boosted by demand from Internet giants).
- Top hard drive/SSD controller supplier Marvell (MRVL -2.1%) is following Seagate/Western lower, as is hard drive assembly supplier Hutchison (HTCH -1.7%). The Nasdaq is down 0.9%.
- Marvell's decline comes as the company reveals a Release 10 4G modem at the Mobile World Congress (competes with chips from Qualcomm, Intel, and others), as well as a partnership with Google to support the Web giant's Ara modular phone project.
- Earlier: Western Digital buys object storage software firm
Fri, Feb. 20, 9:52 AM
- Deja Vu? Three months ago, Marvell (MRVL +0.9%) rallied after posting an FQ3 revenue miss and light FQ4 guidance. This morning, shares have erased the AH losses they saw on account of an FQ4 revenue miss and soft FQ1 guidance.
- Helping the chipmaker's cause: FBR has upgraded to Outperform, and upped its target by $2 to $21. The firm calls the upgrade a valuation call, and argues core earnings power remains intact.
- Also helping: When asked by JPMorgan's Harlan Sur on the CC (transcript) if Marvell is willing to "explore strategic alternatives" for its mobile chip ops, CEO Sehat Sutardja left the door open to a shakeup. "[A]nything that will bring the share value of a shareholder up is our responsibility to entertain and manage and look at all the different possibilities. But for sure okay we are not backing off from this business."
- The FQ4 revenue miss was blamed on "seasonality and a more aggressive pricing environment" for Marvell's mobile baseband chip business. Companies not named Qualcomm or MediaTek have generally struggled to profit from the R&D-intensive business, which has seen Broadcom, Texas Instruments, and ST-Ericsson leave in recent years.
- Sutardja also admitted the Chinese baseband competitive environment has "intensified" - Qualcomm recently reported something similar. 4G chip sales (+50%) were a strong point.
- Hard drive/SSD controller sales remained fairly healthy, falling 4% Q/Q (in-line with seasonality). Marvell states it gained hard drive controller share in FQ4, and that it remains the SSD controller market's leader following 30% sales growth in FY15 (ended Jan. '15).
Thu, Feb. 19, 4:22 PM
- In addition to missing FQ4 revenue estimates (while slightly beating on EPS), Marvell (NASDAQ:MRVL) is guiding for FQ1 revenue of $810M-$830M and EPS of $0.17-$0.19, below a consensus of $884.2M and $0.22.
- As was the case three months ago, no explanation is given in the earnings release for Marvell's revenue miss or guidance. Deutsche recently argued weak Chinese smartphone baseband chip sales - Marvell faces competition from MediaTek, Qualcomm, and others - would pressure FQ4 results.
- Helping EPS beating estimates: FQ4 gross margin was 51.8%, up from 51% in FQ3 and 50.1% a year ago, and above guidance of 49.5%-51.5%. FQ1 GM guidance is also at 49.5%-51.5%. Also helping: GAAP operating expenses fell 1% Y/Y to $360.5M. Just $20M was spent on buybacks.
- Shares are down to $15.60 AH.
- FQ4 results, PR
Thu, Jan. 8, 2:38 PM
- In the wake of a Chinese media report stating a local firm is weighing a bid for Marvell's (NASDAQ:MRVL) mobile chip unit, MKM argues a sale of the business to Intel would be "a solid win-win for both parties."
- MKM asserts buying Marvell would allow Intel to "scale-up in its wireless and foundry businesses," and bolster its chances of succeeding in a very competitive mobile baseband market where Qualcomm/MediaTek still dominate.
- Meanwhile, Marvell could still see earnings grow 10% in spite of the loss of wireless sales (30% of total revenue), thanks to a 40% drop in R&D and sales/marketing spend, and relatively low mobile gross margins (~45%). MKM also believes the deal could dull patent lawsuit fears and allow Marvell to negotiate a favorable foundry deal with Intel.
- One potential roadblock: Intel's deals with Chinese baseband vendors/Marvell rivals Spreadtrum and RDA present a conflict of interest.
- Shares +15% since the Chinese report surfaced on Tuesday. Today's gains are aided by a 3.1% rise for the Philadelphia Semi Index.
Tue, Jan. 6, 12:58 PM
- After previously following the tech sector lower, Marvell (MRVL +3.5%) has popped on a Chinese media report China Electronics is weighing a bid for Marvell's mobile chip ops.
- Marvell's mobile baseband chip unit depends heavily on sales of 3G and 4G phones used on China Mobile's network. The business is believed to have much lower margins than those of Marvell's hard drive/SSD controller and Ethernet IC ops.
- Chipmakers not named Qualcomm, MediaTek, or Spreadtrum have struggled to profit from the baseband market. However, Marvell did state in November it expects strong FY16 (ends Jan. '16) growth for the business thanks to surging Chinese 4G phone sales.
Nov. 21, 2014, 11:17 AM
- Though weak baseband processor sales are weighing on Marvell (NASDAQ:MRVL) near-term, management "expects their mobile business to turn around starting in the April quarter, and for mobile unit shipments to double y/y in FY16," notes Stifel's Kevin Cassidy. He's reiterating a Buy, albeit while cutting his target by $2 to $16 and voicing some concerns about ASP/margin erosion.
- RBC is also staying bullish, predicting mobile sales will rebound next year and that Marvell's $1.54B Carnegie Mellon infringement verdict will ultimately be lowered. The firm has also cut its target, and so have Nomura and Deutsche, but no downgrades have arrived.
- On the CC (transcript), CEO Sehat Sutardja mentioned mobile sales fell 13% Q/Q in FQ3 due to customer mix (read: weak Samsung demand) and a "shift from the carrier-driven models to the open market in China, which required full turnkey [platform] support." Turnkey revenue is expected to arrive in FQ2 of next year.
- Networking chip sales fell 7% Q/Q due to weak carrier capex, but is expected to be flat in FQ4. Storage revenue rose 3%, with both hard drive and SSD controller revenue growing. Marvell says it remains the top SSD controller vendor, and will begin seeing revenue from mobile SSD offerings next year.
- A mix shift away from mobile contributed to Marvell's better-than-expected gross margin.
- FQ3 results, guidance/details.
Nov. 20, 2014, 4:21 PM
- Marvell (NASDAQ:MRVL) expects FQ4 revenue of $880M-$900M and EPS of $0.22-$0.26, almost entirely below a consensus of $930.9M and $0.26.
- No explanation is given in the FQ3 report for the company's big revenue miss; analysts have raised concerns about Marvell's China-dependent baseband chip sales.
- Helping EPS meet estimates: FQ3 gross margin was 51%, +40 bps Q/Q and +70 bps Y/Y, and at the high end of a 49%-51% guidance range. FQ4 GM guidance is at 49.5%-51.5%.
- Also helping: GAAP opex fell 3% Y/Y to $359.6M, and $45M was spent on buybacks.
- FQ3 results, PR
Oct. 31, 2014, 11:31 AM
- Three weeks after providing a calendar Q3 warning that triggered a massive chip stock rout, Microchip (MCHP +7.3%) has provided Q4 guidance that's in-line with lowered estimates. The microcontroller vendor, which has often seen trends emerge ahead of peers, also said it saw most of its inventory correction in Q3, and expects Q4 sales to be just "slightly below typical seasonal levels."
- Chip stocks are up strongly (SOXX +4%) on a day the Nasdaq is up 1.4%. Since Microchip's warning, a slew of analog chipmakers and microcontroller firms (e.g. Atmel, Freescale, STMicro, Intersil, Linear) have offered light Q4 guidance, and other firms have reported seeing high-end Android weakness (e.g. Synaptics, Cirrus Logic, Amkor).
- On the other hand, several mobile chipmakers (Skyworks, RF Micro, TriQuint, Silicon Motion), some of which have decent iPhone exposure, have provided strong results and/or guidance. Other chipmakers, such as Broadcom, Texas Instruments, and Xilinx, have rallied after delivering in-line guidance.
- Susquehanna's Chris Caso: "By now, we think it’s clear that the weakness MCHP saw in September is not company specific ... The question now is if the full extent of the weakness has been dialed into estimates. If it has, then this would be among the shortest and mildest downturns in many years."
- Notable gainers: SNDK +3.9%. MU +4.1%. AMAT +3.9%. TXN +4.7%. NXPI +3.9%. NVDA +3.5%. MXIM +4.7%. LLTC +5.1%. FCS +9.6%. FSL +8.8%. ADI +6.5%. TQNT +6.8%. RFMD +6.5%. ATML +5.9%. AVGO +5.1%. MRVL +4.7%. AMCC +8.9%. BRCM +3.6%. TSM +4.4%. ARMH +3.3%.
- Intel (INTC +3.5%) has recovered most of the losses it saw yesterday due to Intesil's (ISIL +3.3%) results and guidance, and related comments about a PC chip inventory correction.
- Chip ETFs: SMH, XSD, PSI, SOXL, USD, SOXS, SSG
Aug. 21, 2014, 4:38 PM
- Though Marvell (NASDAQ:MRVL) posted in-line FQ2 revenue and beat EPS estimates, it's guiding for FQ3 revenue of $960M-$1B and EPS of $0.29 (+/- $0.02), below a consensus of $1.01B and $0.32. No explanation is provided in the earnings release for the outlook.
- FQ2 gross margin was 50.6%, +180 bps Q/Q and -140 bps Y/Y, and near the high end of a 49%-51% guidance range (drove the EPS beat). FQ3 GM guidance is also at 49%-51%.
- GAAP opex fell 2% Y/Y to $363.4M (compares with a slight revenue increase), with R&D spend nearly flat at $294.8M. No buybacks were carried out.
- FQ2 results, PR
Jun. 11, 2014, 9:55 AM
- Nomura has upgraded Marvell (MRVL +2.8%) to Buy, and hiked its PT by $4 to $19. The firm is optimistic about the chipmaker's ability to grow its 4G baseband processor sales.
- Better-than-expected baseband demand fueled Marvell's big FQ1 revenue beat. The company has scored a decent number of design wins with Chinese OEMs for phones running on China Mobile's new 4G TD-LTE network, and has also had its chips certified for use on AT&T and Verizon's networks.
- Mobile/wireless sales (inc. Wi-Fi/Bluetooth combo chips) made up 33% of Marvell's FQ1 sales. Qualcomm still claims the lion's share of the 4G baseband market, aided by leads in multi-band support and high-end app processor integration.
Jun. 5, 2014, 9:28 AM| 4 Comments
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May. 1, 2014, 10:06 AM
- Like Seagate (STX -4%), Western Digital (WDC -6.1%) missed FQ3 revenue estimates while beating EPS forecasts. Also like Seagate, it offered light FQ4 guidance on its CC (transcript): Revenue of $3.5B-$3.6B and EPS of $1.65-$1.75 vs. a consensus of $3.72B and $1.89.
- While Seagate estimates March quarter industry hard drive shipments totaled 138M, Western pegs them at 137M. More importantly, the company expects shipments to fall to 130M in the June quarter.
- Goldman notes hyperscale data center owners (Google, Facebook, Amazon, etc.) are getting more efficient with their storage usage, and that this is affecting both Western and Seagate. Seagate is also dealing with inventory issues at enterprise storage OEMs; Western isn't reporting anything similar.
- With SSDs continuing to encroach on hard drives, Western's enterprise SSD sales grew to $134M (+46% Y/Y, still less than 4% of sales) in FQ3, and are expected to outgrow the broader market going forward. Non-PC applications made up 53% of total revenue.
- Western's ASP fell $2 Q/Q to $58 due to.a mix shift towards console hard drive sales. In spite of the ASP drop, gross margin was 30.1%, flat Q/Q and up 90 bps Y/Y, and above guidance of 29.5%. A 29.5% GM is forecast for FQ4.
- $244M was spent on buybacks, up from $150M in FQ2. Free cash flow was $536M vs. $539M a year ago.
- Hard drive controller supplier Marvell (MRVL -1%) is off moderately.
Apr. 17, 2014, 5:26 PM
- After underperforming yesterday in response to a mixture of in-line and soft outlooks from Intel, ASML, and Linear, chip stocks bounced back strongly following more encouraging numbers from foundry giant TSMC, NAND flash giant SanDisk, and well-diversified Cypress.
- TSMC, seen as a bellwether for chip demand due to a client list that includes most of the world's top fabless chipmakers (Qualcomm, Broadcom, MediaTek, Xilinx, etc.), beat Q1 estimates, issued strong Q2 guidance, and reported seeing healthy sales from mobile clients, and for its advanced 28nm process node.
- SanDisk offered strong margin guidance to go with a Q1 beat. Cypress posted a slight Q1 revenue beat, and issued Q2 revenue guidance that beat consensus at the midpoint.
- Notable gainers: ARMH +3.9%. MRVL +2.2%. CODE +5.1%. RMBS +4.4%. IDTI +3%. ENTR +3.7%. PXLW +6.1%. QUIK +2.4%.
Feb. 20, 2014, 5:41 PM
- Aruba Networks (ARUN) expects FQ3 revenue of $178M-$182M and EPS of $0.19-$0.20, largely favorable to a consensus of $174.6M and $0.19. The company has also announced a new $200M buyback authorization, and says the $200M authorized in October has been spent. Shares +4.8% AH. (FQ2 results, PR)
- Marvell (MRVL) expects FQ1 revenue of $870M-$910M and EPS of $0.20-$0.24 vs. a consensus of $848.9M and $0.21. Shares -2.6% AH. (FQ4 results, PR)
- Maxwell (MXWL) expects Q1 revenue to be "flat to slightly up" in Q1 from a Q4 level of $39M. The Q1 consensus is at $39.2M. Shares -7.2% AH. (Q4 results, PR)
- QLIK expects Q1 revenue of $110M-$114M and EPS of -$0.14 to -$0.12, vs. a consensus of $113.2M and -$0.05. Full-year guidance is for revenue of $545M-$555M and EPS of $0.23-$0.27 vs. a consensus of $550.4M and $0.41. Shares +1% AH. Expectations have been muted. (Q4 results, PR)
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