Marvell's Q1 profit, sales drop, but better-than-expected Q2 outlook lifts shares
Marvell Technology Group (NASDAQ:MRVL) reported late Thursday a near 30% decrease in its first quarter net income, mainly due to the seasonal nature of its business, it said.
For the three months ending April 30, the Hamilton, Bermuda-based company, which focuses on the development of storage, communications and consumer silicon solutions, reported net income of $147 million, or $0.22 per share, a 28.6% decrease from the year-ago period's $206 million, or $0.30 per share.
Adjusted to exclude one time benefits and expenses, profits decreased 27.3% to $189 million, or $0.29 per share, one cent below analyst estimates of $0.30 per share.
Sales at Marvell dropped 6% to $802 million, again below the $826 million expected by the market.
According to reports, Marvell's sales were impacted as its biggest handset customer, RIM, is selling more phones in emerging markets that do not use the company's mobile processors. The wireless business was also hit by a seasonal fall in chip demand after the holiday season.
"The results for our first quarter reflected the typical seasonality of our consumer centric end markets," said CEO, Dr. Sehat Sutardja.
The company also said that its HDD business was hit by the tragic events in Japan.
Despite this, Marvell said, however, that it expects a better second quarter with revenue in the range of $870 to $910 million, representing an 8% to 13% sequential boost.
As a result, the company's stocks jumped 10.10% in pre-market trading on Friday, sitting at $16.03 each as of 10:00am EST.
First quarter operating expenses increased to $320 million from $303 million a year earlier, the bulk of which came from research and development, and selling and marketing expenses.
As sales dropped and operating expenses increased, Marvell's gross margin slipped to 58.3% from 59.8%, the company said.
In an effort to return shareholder value, Marvell re-purchased approximately 50 million shares during the quarter at a total cost of $800 million.
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