Shares of semiconductor chipmaker,
Marvell Technologies Group Ltd.
), have been moving down ever since the news that U.S. District
Judge Nora Barry Fischer denied the company a new trial or
reduction in damages against Carnegie Mellon University
In 2012, Marvell was found guilty of infringing two patented
technologies of CMU and was asked to pay a penalty of $1.17
billion as damages. The patented technologies of CMU have helped
Marvell deliver high performing chips, which in turn would help
hard disk drives to accurately read data from high speed magnetic
CMU sued Marvell in Mar 2009, alleging that the semiconductor
chipmaker infringed its patents and sold billions of chips.
Reportedly, Marvell earned a hefty $10.34 billion as revenues and
$5.05 billion as operating profit leveraging the technology.
Now, in the light of the court's verdict that Marvell's
infringement was willful, damages could triple. However, the
Judge will take her decision on the compensation amount in
Reportedly, Marvell will proceed with the case at the U.S.
Court of Appeals for the Federal Circuit. However, the impending
decision on the hefty damages would weigh on the company's
Separately, Marvell delivered solid second-quarter results
which came ahead of the Zacks Consensus Estimate. Revenue
contributions from the end markets were in line with
expectations. Share buybacks remained a positive. The
third-quarter guidance reflects strength and gives an overall
positive view for the rest of the year.
We remain positive on Marvell's diverse revenue model and
stable balance sheet. However, we remain concerned about stiff
competition in the semiconductor market from major players such
Texas Instruments Inc.
). Sluggish macroeconomic conditions coupled with higher material
costs and the company's European exposure could pose near-term
headwinds for the company.
Currently, Marvell has a Zacks Rank #3 (Hold).
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