Marvell Technology Group Ltd. Earnings Cheat Sheet: Margins Shrink on Rising Costs, Net Income Falls

Marvell Technology Group Ltd. (NASDAQ:MRVL) reported its results for the third 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 Third Quarter

Results: Net income for Marvell Technology Group Ltd. fell to $195.1 million (32 cents per share) vs. $255.7 million (38 cents per share) a year earlier. This is a decline of 23.7% from the year earlier quarter.

Revenue: Fell 0.9% to $950.4 million from the year earlier quarter.

Actual vs. Wall St. Expectations: MRVL reported adjusted net income of 40 cents per share. By that measure, the company beat the mean estimate of 35 cents per share. Analysts were expecting revenue of $942.8 million.

Quoting Management: “We are pleased with our third quarter results as we demonstrated solid growth in the quarter driven by our Mobile and Wireless end market, which grew over 20% sequentially. Our TD mobile phone platforms have been extremely well received by customers,” said Dr.Sehat Sutardja, Marvell’s Chairman and Chief Executive Officer.

Key Stats:

Gross margin shrank 2.6 percentage points to 56.6%. The contraction appeared to be driven by increased costs, which rose 5.4% from the year earlier quarter while revenue fell 0.9%.

The company has now seen net income fall in each of the last three quarters. In the second quarter, net income fell 12.5% from the year earlier, while the figure fell 28.6% in the first quarter.

The company has now beaten estimates the last two quarters. In the second quarter, it topped expectations with net income of 33 cents versus a mean estimate of net income of 32 cents per share.

Over the last five quarters, revenue has increased 3.9% on average year over year. The biggest increase came in the third quarter of the last fiscal year, when revenue rose 19.5% from the year earlier quarter.

Looking Forward: Analysts appear increasingly negative about the company’s results for the next quarter. The average estimate for the fourth quarter has moved down from 37 cents a share to 25 cents over the last ninety days. The average estimate for the fiscal year is $1.18 per share, down from $1.31 ninety days ago.

Competitors to Watch: Texas Instruments Inc. (NYSE:TXN), Intel Corporation (NASDAQ:INTC), Broadcom Corporation (NASDAQ:BRCM), PLX Technology, Inc. (NASDAQ:PLXT), Standard Microsystems Corp. (NASDAQ:SMSC), PMC-Sierra, Inc. (NASDAQ:PMCS), LSI Corporation (NYSE:LSI), STMicroelectronics N.V. (NYSE:STM), and NVIDIA Corporation (NASDAQ:NVDA).

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