Marvell Technology Group Ltd. (NASDAQ: MRVL) reported late on Thursday that its fiscal first-quarter earnings slumped 44% as higher operating costs and lower revenue weighed on the bottom line; however, shares rallied about 5.20% in aftermarket hours as adjusted earnings and revenue topped Wall Street’s expectations.
The Hamilton HM based Company, whose product portfolio includes data storage devices, mobile handsets and hosts of other items, has been witnessing declining sales trend in the recent past due to multiple factors. While flagging demand for personal computers has weighed on the demand for chips and other hard drive parts, weakness at Research Motion (Blackberry), which is Marvell’s leading customer for mobiles, also put more pressure on the top line. Besides, slowing down of China is also contributing to Marvell’s woes.
However, on Thursday, Marvell Technology Group’s Chief Executive Sehat Sutardja said that Company is gaining traction in storage and networking markets. The Company expects to perform better in the current quarter as its mobile devices and connectivity businesses gain more strength.
For the fiscal first quarter ended May 4, Marvell reported a net income of $53.2 million or 11 cents a share compared to a profit of $94.5 million or 16 cents a share, in the same quarter of last year. Stripping out onetime items such as stock based compensation, non-GAAP earnings came at 19 cents a share compared to 23 cents a share, in the year-earlier quarter.
Revenue plunged 7.8% to $734.4 million. Analysts polled by Thomson Reuters were expecting earnings of 14 cents a share on revenue of $721.55 million.
Earlier, the Company projected earnings of 14 cents a share, plus or minus two cents on assumption that revenue will be between $700 million and $740 million.
Gross margin improved to 54.3% in the fiscal first quarter from 54% in the same period of last fiscal but operating expenses increased 5.9% due to higher research and development costs.
For the fiscal second quarter, Marvell Technology expects adjusted earnings of 19 cents a share, plus or minus 2 cents, on assumption that revenue would come between $770 million to $810 million. Analysts’ consensus estimate was for earnings of 18 cents a share on revenue of $763 million.
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