Markets

Marvell Technology (MRVL) Q4 Earnings and Revenues Beat

Marvell Technology Group Ltd. MRVL reported modest fourth-quarter fiscal 2017 (ended Jan 28, 2017) results.

The company reported adjusted earnings (including stock-based compensation but excluding amortization, acquisition, restructuring, legal related expenses and other one-time items) of 18 cents per share, which comfortably beat the Zacks Consensus Estimate of 13 cents. Also, reported earnings were far better than the year-ago figure of 5 cent.

Over the last one year, the stock has surged roughly 63.79% and has also outshined the Zacks categorized Semiconductor-Communications industry's gain of 54.24%.

Quarter Details

Marvell's revenues fell 5.2% year over year to $571.4 million. The reported figure also beat the Zacks Consensus Estimate of $571 million by a nominal margin. The company blamed softer-than-expected demand in the mobile handset business for the lackluster revenue performance.

At the end markets, storage revenues increased 8% year over year on better-than-expected demand at the HDD (Hard-Disk Drive) and SSD (Solid-State Drive) segments.

The networking business increased 13% year over year mainly on the back of strong demand in the enterprise networking business.

Revenues from the mobile and wireless segment decreased 19% year over year, primarily due to decline in mobile WiFi product revenues. Other product revenues during the quarter declined more than 50%, mainly due to a drop in mobile handset platform revenues.

Marvell's adjusted gross profit came in at $327.5 million, up 4.3% on a year-over-year basis. Gross margin also increased from 52.1% to 57.3% on a year-over-year basis, primarily buoyed by a favorable product mix and higher operational efficiency.

Adjusted operating expenses were down 15.2% year over year to $238.9 million. Marvell's adjusted operating income came in at $88.5 million as compared with $32.2 million reported in the year-ago period. The results were positively impacted by lower operating expenses as a percentage of revenues (down 493 basis points year over year).

The company reported adjusted net income (including stock-based compensation but excluding amortization, acquisition, restructuring, legal related expenses and other one-time items) of approximately $91.8 million during the quarter as compared with $34.4 million reported in the year-ago quarter.

GAAP net loss for the quarter came in at $76.9 million as against net income of $17.2 million reported in the year-ago quarter.

Marvell exited the quarter with cash, cash equivalents and short-term investments of $1.668 billion as compared to $1.65 billion in the previous quarter. Cash from operating activities during the quarter amounted to $118.8 million. The company carries no long-term debt.

During the quarter, Marvell paid $30 million as dividend to its shareholders and repurchased $125 million worth of shares.

Outlook

Marvell expects first-quarter fiscal 2018 revenues at $570 million (+/- 2%). The Zacks Consensus Estimate is pegged at $549 million.

Management expects non-GAAP gross margin at around 59%, while non-GAAP operating expenses are expected to be roughly $220 million to $225 million. The company expects non-GAAP earnings per share in the band of 19 cents to 23 cents while the Zacks Consensus Estimate is pegged at 11 cents.

Our Take

Marvell reported modest fourth-quarter fiscal 2017 results, wherein the bottom line surpassed the Zacks Consensus Estimate and the top line was almost in line with the same. However, revenues slumped on a year-over-year basis mainly due to lower demand in the mobile handset business. Nonetheless, the company provided an encouraging first-quarter guidance.

Though the macro headwinds and stringent regulations might put the company's financials under pressure in the near term, we believe that the strong demand for Marvell's 4G LTE products could be a growth driver. This will be supported by growth from the company's wide range of newly-launched Internet of Things (IoT) solutions.

Going forward, the company's recent restructuring initiative will help Marvell improve cloud infrastructure and applications, which are expected to drive the company's top line. The latest buyback scheme also reflects the company's sound financial position and favorable prospects.

However, competition in the semiconductor market from major players such as Intel Corp. INTC and Texas Instruments Inc. TXN is a headwind.

Currently, Marvell has a Zacks Rank #3 (Hold).You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

A better-ranked stock in the technology space is Seagate Technology plc STX , sporting a Zacks Rank #1.

Seagate has long-term expected earnings per share growth rate of 8.17%.

Zacks' Best Investment Ideas for Long-Term Profit

Today you can gain access to long-term trades with double and triple-digit profit potential rarely available to the public. Starting now, you can look inside our stocks under $10, home run and value stock portfolios, plus more. Want a peek at this private information? Click here >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Seagate Technology PLC (STX): Free Stock Analysis Report

Marvell Technology Group Ltd. (MRVL): Free Stock Analysis Report

Intel Corporation (INTC): Free Stock Analysis Report

Texas Instruments Incorporated (TXN): Free Stock Analysis Report

To read this article on Zacks.com click here.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

MRVL INTC TXN STX

Other Topics

Earnings Stocks

Latest Markets Videos

Zacks

Zacks is the leading investment research firm focusing on stock research, analysis and recommendations. In 1978, our founder discovered the power of earnings estimate revisions to enable profitable investment decisions. Today, that discovery is still the heart of the Zacks Rank. A wealth of resources for individual investors is available at www.zacks.com.

Learn More