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
Wed, May 27, 5:41 PM
Fri, May 22, 12:47 PM
Thu, May 21, 5:06 PM
- Though officially missing consensus, Marvell's (NASDAQ:MRVL) FQ1 revenue of $724.3M was near the midpoint of the $710M-$740M guidance range provided in its April 24 warning. However, the company has guided for FQ2 revenue of $710M-$740M and EPS of $0.10-$0.12, below a consensus of $784.3M and $0.16. Some FQ2 weakness was likely expected following the warning.
- Driving the FQ1 EPS beat: Gross margin (non-GAAP) was 51.6%, -20 bps Q/Q (seasonality) but +280 bps Y/Y, and (in spite of the sales warning) above February guidance of 49.5%-51.5%. FQ2 GM guidance is at 49%-51%.
- Also helping: GAAP operating expenses fell 3% Y/Y to $359.9M - R&D spend totaled $280.1M, sales/marketing $36.2M, and G&A $41M. $22M was spent to buy back 1.4M shares.
- Marvell has fallen to $14.00 AH.
- FQ1 results, PR
Wed, Apr. 29, 9:34 AM
- JMP Securities has downgraded Marvell (MRVL -1.3%) to Underperform 5 days after the company issued an FQ1 warning, and cut its target to $10.
- Craig-Hallum and Ladenburg Thalmann had already downgraded Marvell following the warning. Raymond James has defended the company, arguing its issues are "inventory-related in PCs and demand-related in China’s wireless markets – not market share related." The firm thinks Marvell is still well-positioned to gain hard drive/SSD controller share long-term.
- Benchmark (Hold), on the other hand, is worried Marvell lacks the scale to compete in the R&D-intensive mobile baseband chip market against Qualcomm and MediaTek, that PC weakness will make it tough for Marvell to grow hard drive/SSD SoC sales, and that its "highest volume [Wi-Fi] connectivity design wins are tied to ailing smartphone platform business and/or maturing consumer product cycles (e.g. PS3, Xbox One & Chromecast).”
- With shares having fallen sharply (along with other chip stocks) prior to the warning, they're down less than 3% since it was issued.
Fri, Apr. 24, 5:37 PM
Fri, Apr. 24, 5:32 PM
- Marvell (NASDAQ:MRVL) now expects FQ1 revenue of $710M-$740M, well below prior guidance of $810M-$830M and an $816.3M consensus. All other guidance has been withdrawn.
- The chipmaker blames "weaker than previously expected PC and storage markets and lower than expected emerging market demand." The former is presumably a reference to hard drive/SSD controller sales; the latter might be a reference to Chinese baseband chip sales.
- PC sales were down sharply in Q1, thanks in large part to weak corporate and Japanese demand. Meanwhile, analysts have voiced concerns about soft chip orders from Chinese smartphone OEMs.
- Shares have fallen to $13.50 AH. They fell 1.6% in regular trading after several peers offered soft guidance. Full FQ1 results arrive on May 21.
Fri, Apr. 24, 2:03 PM
- Though the Nasdaq is up 0.7% thanks to market-pleasing earnings from Google, Microsoft, and Amazon, chip stocks (SOXX -2.1%) are adding to their Thursday losses after Freescale, Altera, Microsemi, and Maxim joined the ranks of chipmakers offering soft Q2 guidance; Texas Instruments, Xilinx, and Qualcomm did so on Wednesday afternoon.
- NXP (NXPI -4.3%), set to merge with Freescale in a cash/stock deal, is selling off ahead of its April 29 Q1 report. RF chipmakers Skyworks (SWKS -3.8%), Qorvo (QRVO -4.4%), and Avago (AVGO -5.2%) are also seeing steep declines.
- Other decliners include a slew of telecom/networking, microcontroller, and analog/mixed-signal chipmakers. The group includes Marvell (MRVL -3%), ON Semi (ON -6.9%), Atmel (ATML -3.3%), Cypress (CY -4%), Lattice (LSCC -3.9%), Semtech (SMTC -6.9%), Cavium (CAVM -6%), PMC-Sierra (PMCS -2.9%), InPhi (IPHI -3.8%), and Silicon Labs (SLAB -2.9%). Chip packaging/testing firm Amkor (AMKR -5.7%) is also off; its Q1 report arrives on Monday.
- As was the case with TI and Xilinx, soft telecom equipment chip demand was often blamed by those guiding light yesterday afternoon. Freescale (FSL -3.5%) stated it expects network processor division sales to be down Q/Q and RF (base station power amplifier) division sales to be flat. Microcontroller, automotive, and analog and sensor division sales are expected to rise.
- Altera (ALTR -3.3%) stated its "telecom and wireless business, and particularly our wireless business globally looks to be quite weak in [Q2], while the rest for our business will in aggregate be flat to slightly up." Regarding its Q1 miss, the company notes "Industrial, test, compute and storage, and to a lesser extent military, fell short of our forecast" (share loss to Xilinx?).
- Maxim reports seeing "broad-based softness in communications infrastructure demand" and soft industrial bookings to go with healthier mobile/auto demand. The Galaxy S6 appears to be giving a lift to Maxim's mobile sales.
- Chip ETFs: SMH, XSD, PSI, SOXL, USD, SOXS, SSG
Thu, Mar. 19, 5:52 PM
- After rising 5.8% in regular trading today, specialty analog/mixed-signal chipmaker Microsemi (NASDAQ:MSCC) is up 8% since announcing yesterday morning (just before its analyst day) it's buying Ethernet chipmaker Vitesse (NASDAQ:VTSS) for $389M. Shares have made new highs along the way.
- Vitesse closed today $5.31, $0.03 above Microsemi's offer price. Ascendiant Capital's Cody Acree calls the offer "a bit low," and (given the deal is expected to be immediately accretive for Microsemi) thinks a rival bid might arrive. "Potential suitors could include Broadcom (NASDAQ:BRCM) or Marvell (NASDAQ:MRVL), who are already leaders in Ethernet and would see natural synergies in VTSS’s portfolio or Avago (NASDAQ:AVGO) who has also been particularly acquisitive."
- Meanwhile, Stifel's Tore Svanberg has hiked his Microsemi target by $5 to $40 in response to the Vitesse deal and Microsemi's analyst day presentations (slides - .pdf). "[M]anagement reiterated its strategy to maximize profitability, grow its market share in core products, while expanding its [addressable market] through new product initiatives and deeper penetration into their existing customer base."
- Svanberg adds the Vitesse deal "helps expand [Microsemi's] silicon/dollar content initiatives, especially in the comms infrastructure space and adds differentiated technology with high barriers to entry." He sees the purchase making Microsemi's goal of achieving a 60% gross margin and 30% op. margin in 2016 (compares with 56.2% and 24.4% in calendar Q4) easier to attain.
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).
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