Marvell Drops Most in Six Years as Forecast Falls Short
Stock Chart for Marvell Technology Group Ltd (MRVL)
Marvell Technology Group Ltd. (MRVL), a maker of chips for mobile phones and communication and storage gear, declined the most in more than six years after predicting sales and profit that fell short of analysts’ estimates.
The stock tumbled 14 percent to $10.54 at the close in New York, for the biggest drop since June 2006. Marvell said yesterday that profit, excluding some costs, will be 24 cents a share, plus or minus 2 cents, in the current quarter, which ends in October. Analysts on average had estimated 32 cents, according to data compiled by Bloomberg. Sales will be $800 million to $850 million, compared with a $913 million average analyst projection.
Marvell’s storage business, which makes chips that control computer hard drives, is suffering as personal computer demand slows and device makers turn to alternative technology. Its wireless business is struggling as customers such as Research In Motion Ltd. (RIM) lose market share.
Chief Executive Officer Sehat Sutardja said on a conference call yesterday he expects the mobile and wireless market to decline by mid-single percentage points in the third quarter from the second.
“Our results in the second quarter were affected primarily by the slowdown in the macro-economic environment that impacted our storage and mobile markets,” Sehat said in a statement.
The computer storage market will grow in the low-single digits in the same period, he said.
Second-quarter net income was $93.1 million, or 16 cents a share, compared with $192.4 million, or 31 cents, in the same period a year earlier. Revenue fell 9.1 percent to $816.1 million. Both sales and profit missed analysts’ predictions.
The stock had gained 34 cents, or 2.9 percent, to $12.28 at yesterday’s close in New York, leaving it down 11.3 percent this year.
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