Marvell Stock Plummets After Accounting Firm PwC Resignsby
PricewaterhouseCoopers told Marvell to broaden audits
Outside auditor said company needs to examine tone at top
Marvell Technology Group Inc., a chipmaker that disclosed an internal investigation into its accounting last month, plunged to its lowest price in more than two years after saying PricewaterhouseCoopers LLP resigned as its external accounting firm.
The stock plummeted 15 percent to $8.05 at the close Tuesday in New York to its lowest price since January 2013, a day after Marvell disclosed PwC’s decision in a regulatory filing. PwC told the audit committee of its resignation on Oct. 20 and wasn’t asked by the Santa Clara, California-based company to resign, according to the statement released Monday.
PwC advised Marvell that it needs to expand its 2016 audit, according to the statement. The accounting firm also questioned whether senior management set a “tone for effective control.” PwC also called for scrutiny of Marvell’s process and judgment in taking reserves to cover litigation, royalty expenses and financial reporting.
Marvell said on Sept. 11 that it was looking into whether revenue was recognized earlier than it should have been, and, in similar language, senior management’s oversight. The chipmaker’s audit committee was looking into about 7 percent to 8 percent of revenue recognized in the fiscal second quarter that would have been received in the third, the company said at the time.
The company posted an unexpected loss of $382.4 million for the second quarter, which included a charge of $394 million as a contingency against pending litigation. Analysts on average had predicted a profit of $11.9 million, according to data compiled by Bloomberg.
The company and senior executives were accused in a shareholder lawsuit in Manhattan federal court of making false or misleading statements before the earnings report and the disclosure of the internal probe.
Marvell’s stock fell 1.2 percent to $9.45 at the close in New York on Monday before the latest filing, leaving it down 35 percent this year.
Two of Marvell’s top three largest shareholders are Sehat Sutardja and his brother Pantas Sutardja, according to data compiled by Bloomberg. Weili Dai, Sehat Sutardja’s wife, is the company’s president.
Sukhi Nagesh, the company’s head of investor relations who was serving as interim chief financial officer, has been reassigned withing the company, Marvell said Oct. 9.