Marvell Technology Group Ltd. Earnings Call Nuggets: PC Market Share and Unified 3G Platform Outlook

Marvell Technology Group, Ltd. (NASDAQ:MRVL) recently reported its first quarter earnings and discussed the following topics in its earnings conference call.

PC Market Share

Delos Elder – Citi: This is (Delos Elder) for Glen Yeung. I want to ask question about the PC market in the back half of 2013. I know you are gaining share there but could just address are you gaining share in a growing or shrinking pie?

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Brad Feller – VP, Corporate Controller and Interim CFO: That’s pretty hard for us to answer. Obviously, I think, we’ve mentioned this in the past as well, we are not directly – we are two steps removed from the PC OEMs and obviously we hear the same as you guys do about weaker PC market, but if you just go back to what Sehat said in his prepared remarks and what some of the drive customers have said, they are seeing increased applications for hard drives and non-PC applications, right and I think one of our big customers said on their earnings call as well. So, while it’s hard for us to really predict what the PC market is going to be doing and drive seem to be holding their own.

Delos Elder – Citi: Then as a follow-up, I know, you are talking a lot about the improvement in your mobile and wireless division. Can you talk little bit about how this can be broken down into device types and you said both smartphone and tablet, but can you give us a sense of which would be more and then also by geography, if possible?

Brad Feller – VP, Corporate Controller and Interim CFO: Actually, we only have a single product, okay. I think we’ve mentioned several times in the past. We are focusing our solution to just a single platform device. So, specifically, in the prepared comments, the device – the products, the smartphones as well as tablet that runs exactly on the same identical device. So, no, there is not anything specific difference between the silicon – difference between the two products…

Sukhi Nagesh – VP, IR: In other words, if you look at 3G platform, the dual core or quad core devices, they can go into smartphones or tablets and it really depends on what the customer wants to use it for.

Dr. Sehat Sutardja – Chairman, President and CEO: Well, okay, but you can read through these by, okay, what you can read through – between the lines means that our smartphone solutions are in class of a tablet class performance, so this actually – this is our strategy of entering this market to become a bigger player by building products that the end user will appreciate. That’s when we just put the dual core and then moving the quad-core and so on, it will be a better performance.

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Unified 3G Platform Outlook

Harlan Sur – JPMorgan: Great to see the strategic initiatives trying to drive some growth here. So, it sounds like the unified 3G baseband platform is a big driver of the incremental growth during Q2. Could you guys just share a little bit more color here, is it both TD and WCDMA smartphones that are ramping? Does it include some tier one handset OEMs as well? And more importantly, do you expect your unified 3G platform to continue to drive growth to the second half of this year? Then I have a follow up question?

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Dr. Sehat Sutardja – Chairman, President and CEO: The answer to this, yes in all those areas. So, it would be more specific if a single platform support 3Gs, both TD and 3Gs, so both handset devices that will be in productions, tablets – there will be tablets they will support 3Gs, as well tablets support TD and so tablets there don’t have anything only just WiFi. So, as we projected early on that earlier in the last couple of quarters that we’re putting a lot of focus in this area and we expect that every quarters we will see measurable improvements, so by the end of the year we will have much better positions in this market.

Brad Feller – VP, Corporate Controller and Interim CFO: We are focused on the top-tier OEMs…

Dr. Sehat Sutardja – Chairman, President and CEO: Yes, I forgot about that. So, the answer is yes so the top-tier OEMs the one go into first in fact.

Harlan Sur – JPMorgan: And then from a financial standpoint the team has committed to keeping OpEx dollars relatively flattish this year over last year roughly about $1.2 billion. You are maintaining that run rate here in the first quarter. Can you keep it flat in the second half as well and how is the team going to continue to balance our the incremental investment dollars require to gain scale in the mobile device market and still commit R&D dollars to other forward-looking initiatives like 64 bit ARM or 100 gigabit Ethernet or 10 gigabit PON and other related development efforts.

Brad Feller – VP, Corporate Controller and Interim CFO: So, I will address the first part of the question, Harlan, which the answer is yes. We are comfortable we can keep operating expenses at the current level which would drive us to roughly flat for the year. We have a lot of initiatives underway under the covers to make that we can do that, but yes we are comfortable we can keep it at these levels.

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Harlan Sur – JPMorgan: And the other part is recently our expenses is high compared to our revenue for the last several quarters. Because we have been investing in a lot of new areas a lot of technologies areas there takes a lot of years your question specific about 64 bps that’s one of the many things that we are investing. So, that’s quite bit of investment in engineering to prepare for the six appropriate ARM which is longer to be meaningful in terms of revenue this year it might be zero revenue this year, but next year and a year from more later down the road, it will become more important. So, lot of this investment has to happen early on and we are already prioritizing our investment. So, basically another – in a way to answer, okay, how do we can keep the expense flattish? It’s just by focusing on investment as a matter in the next several years.

Brad Feller – VP, Corporate Controller and Interim CFO: Harlan, you know that in the last two years our investments are – our operating expenses have actually gone up double-digits each year. Our revenues have actually trail a little bit, right. So, but the investments have been made, now we are reaping some of the benefits, we expect to reap some of the benefits.