Marvell Technology Group Earnings: Revenues Beat Estimate, Investors Still Eye Profits

Marvell Technology Group Ltd. (NASDAQ:MRVL) reported its results for the first quarter. Marvell Technology Group is a global semiconductor provider of analog, mixed-signal, digital signal processing, and embedded microprocessor integrated circuits.

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Marvell Technology Group Earnings Cheat Sheet for the First Quarter

Results: Net income for Marvell Technology Group Ltd. fell to $94.5 million (16 cents per share) vs. $146.9 million (22 cents per share) a year earlier. This is a decline of 35.6% from the year-earlier quarter.

Revenue: Fell 0.8% to $796.4 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: Marvell Technology Group Ltd. fell in line with the mean analyst estimate of 16 cents per share. It beat the average revenue estimate of $768.7 million.

Quoting Management: “Our results in the first quarter were better than anticipated driven in part by our TD smartphone products, which grew about 25% sequentially and increased deployment of our 500 gigabyte per platter mobile storage solutions to all the hard disk drive manufacturers,” said Dr. Sehat Sutardja, Marvell’s Chairman and Chief Executive Officer. “This financial performance gave us the confidence to increase our share repurchase program by $500 million to a total of $2.5 billion, and based on broad institutional shareholder request, to also initiate a quarterly dividend of 6 cents per share.”

Key Stats:

Last quarter was the fifth in a row that the company saw shrinking gross margins, as they fell 4.3 percentage points from the year-earlier quarter to 54%. In that span, margins have contracted an average of 2.9 percentage points per quarter on a year-over-year basis.

Revenue has been on the decline for three quarters in a row. In the fourth quarter of the last fiscal year, revenue declined 17.5% to $742.7 million while the figure fell 0.9% in the third quarter of the last fiscal year from the year earlier.

The company fell in line with estimates last quarter after beating forecasts in the previous quarter with net income of 16 cents versus a mean estimate of net income of 12 cents per share.

Net income has dropped 32.8% year-over-year on average across the last five quarters. Performance was hurt by a 63.8% decline in the fourth quarter of the last fiscal year from the year-earlier quarter.

Looking Forward: For next quarter, analysts have a more positive outlook about the company’s expected results. The average estimate for the second quarter is 23 cents per share, up from 22 cents ninety days ago. The average estimate for the fiscal year is $1.02 per share, a rise from 99 cents ninety days ago.

(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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