Friday, August 18, 2006

Color on quarter: Marvell Tech (MRVL)

Several firms commenting on Marvell Tech (NASDAQ:MRVL) following somewhat weaker than expected results (rev side) and guidance issued last night:

* Oppenheimer notes the co reported July quarter revenues of $574mm versus consensus of $582.9mm and guidance of $580-585mm. Company attributed the miss to weakness to in the PC/Desktop and 802.11n segments as the firm had noted before. On the Positive side, MRVL began consumer shipments of its WLAN segment into PS3, has design wins in its Avago Printer business beyond H-P (HPQ), grew its GbE switch business suggesting share gains.

MRVL also guided Q3 to continuing PC/Desktop (GbE client) and 802.11n weakness, despite, strength in the GbE consumer and Avago printer business. Company guided Q3 top line up 1% QoQ to $580mm vs firm's estimate of $617mm (cons $623mm), gross margins in line with prior 53.4% guidance. MRVL lowered its FY07(Jan) revenue outlook from $2.37-2.43bn to $2.27-2.29bn. Firm believes part of the conservatism is driven by MRVL seeing high PC/desktop inventory (GbE client) build and weakness in the 802.11n with channel stuffing by BRCM and ATHR.

Firm is maintaining their Buy rating, lowering 12-month price target to $25 from $33. Longer term they believe MRVL is one of the best positioned semiconductor companies and the handset part of the story is yet to begin.

* Deutsche Bank notes that despite numerous strong product cycles, MRVL could not escape its exposure to the soft PC mkt (HDD & client GbE) as indicated by its soft F2Q revs and F3Q outlook. After a lackluster F3Q, the firm expects MRVL's growth to reaccelerate in F4Q and beyond as it continues to be a broad-based mkt share gainer. As much negative news is factored into today's valuation, they recommend investors use the current pause in growth as a buying opportunity. Reiterates Buy.

Tgt goes to $27 from $30.

Notablecalls: MRVL's a notorious bouncer and I expect nothing less from the stock after the open. Just a trade, though.

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