Marvell Profit Falls Yet Tops Estimate

(RTTNews) - Chipmaker Marvell Technology Group Ltd. (MRVL) said Thursday after the markets closed that its second quarter profit fell 34% from last year, as revenue declined and operating expenses rose.

However, the company's quarterly earnings per share, excluding items, handily beat analysts' estimates as did its quarterly revenue. At the same time, the company issued an upbeat outlook for the third quarter.

"Our results in the second quarter were at the high-end of our guidance mainly due to better demand and share gains in our storage end market and strong double digit growth in our mobile and wireless end markets," said Dr. Sehat Sutardja, Marvell's Chairman and Chief Executive Officer.

Marvell shares are currently losing 1.08% in after hours trading after closing the day's regular trading session at $12.96, down 9 cents. The shares trade in a 52-week range of $6.98 to $13.51.

Marvell makes chips for mobile phones and for storage devices. Marvell's storage business, which makes chips for hard disk and solid state drives, has been negatively impacted by slowing demand for desktops and notebooks, as customers switch to post-PC products like tablets and smartphones.

Marvell's wireless business, which makes broadband & wireless transceivers used in phones, is also facing problems due to its struggling customer Research in Motion and on competition from smaller rivals.

For the second quarter ended August 3, 2013, the company reported net income of $61.8 million or $0.12 per share, compared to $93.1 million or $0.16 per share for the year-ago quarter.

Excluding items, adjusted net income for the second quarter was $117.9 million or $0.23 per share, compared to $142.0 million or $0.24 per share in the prior year quarter.

On average, 28 analysts polled by Thomson Reuters expected the company to earn $0.19 per share for the second quarter. Analysts' estimates typically exclude special items.

Gross margin for the quarter narrowed to 52.2% from 53.2% a year ago, while adjusted gross margin shrank to 53.0% from 53.6% last year.

Total operating expenses for the quarter rose 7% to $369.0 million from $344.0 million a year earlier.

Revenue for the second quarter fell 1% to $807.06 million from $816.10 million in the same quarter last year. Twenty-eight analysts had a consensus revenue estimate of $791.30 million for the second quarter.

Marvell repurchased about 7.2 million shares of its common stock for a total of $83 million during the second quarter.

Looking forward to the third quarter, the company forecasts revenue of $850 million to $890 million, earnings per share of $0.15 +/- $0.02 and adjusted earnings per share of $0.25 +/- $0.02.

Analysts currently expect the company to earn $0.24 per share on revenue of $843.43 million for the third quarter.