Marvell beats Street but posts weak outlook
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By Yinka AdegokeSAN FRANCISCO (Reuters) - Diversified U.S. chipmaker Marvell Technology Group Ltd gave a conservative outlook for the third quarter, sending shares lower, even after it posted better-than-expected profit helped by increased sales in the wireless and storage sectors.Marvell, whose chips are used in Apple Inc's iPhone and Research In Motion Ltd's BlackBerry, said on Thursday it is still uncertain of the impact of the weakening U.S. economy and predicted revenue growth below Wall Street expectations."They had a strong quarter, which was widely expected, but the outlook was light," said John Dryden, analyst at Charter Equity Research.The company reported second-quarter net income of $71.4 million, or 11 cents per share, compared with a net loss of $56.5 million, or 10 cents per share, in the year-ago period.Non-GAAP profit quadrupled to 24 cents a share.Revenue rose 28 percent to $842.6 million from $656.7 million a year earlier.The results beat Wall Street analysts' average forecasts of non-GAAP profit of 21 cents a share and revenue of $836 million, according to Reuters Estimates."The results for our second quarter were better than we had anticipated," Sehat Sutardja, Marvell chairman and chief executive officer, said in a statement.Marvell said profit was helped by strong revenue growth across its range of products led by wireless and storage products.WEAK OUTLOOKThe company said it expects non-GAAP profit for its third quarter to come in between 24 cents and 26 cents a share, which would be about 13 cents a share lower than GAAP earnings. It said third-quarter revenue would come in at $860 million to $880 million.Wall Street analysts polled by Reuters Estimates have on average forecast non-GAAP profit of 24 cents on revenue of $886.8 million for the third quarter."The shortfall in October-period revenue is disappointing due to expectations for market share gains in storage at both Western Digital and Seagate, which didn't come through in the outlook," said Dryden.Marvell Chief Financial Officer Clyde Hosein told Reuters the company was been "cautious" with its outlook because of uncertainty with the weakening U.S. economy."I would agree we were conservative," said Hosein. "Yet even with a tepid view of the economy we are forecasting 14 to 16 percent revenue growth year-over-year, which is way ahead of forecasts for the semiconductor industry."Marvell shares traded down 50 cents, or 3.4 percent, at $14.26 following the earnings report, after closing up 32 cents, or 2.2 percent, at $14.76 on Nasdaq.(Reporting by Yinka Adegoke; Editing by Gary Hill and Andre Grenon)
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