Post Earnings Coverage as Marvell Surpassed Market Expectations and Announces $1 Billion Stock Repurchase Program

Upcoming AWS Coverage on Analog Devices Post-Earnings Results

LONDON, UK / ACCESSWIRE / November 30, 2016 / Active Wall St. announces its post-earnings coverage on Marvell Technology Group Ltd. (NASDAQ: MRVL). The company reported its third quarter fiscal 2017 (Q3 FY17) earnings on November 17, 2016. The chipmaker topped earnings and revenue expectations. Register with us now for your free membership at: http://www.activewallst.com/register/.

One of Marvell Technology Group’s competitors within the Semiconductor – Integrated Circuits space, Analog Devices, Inc. (NASDAQ: ADI), announced on November 22, 2016, financial results for its fourth quarter and fiscal year 2016, which ended October 29, 2016. AWS will be initiating a research report on Analog Devices in the coming days.

Today, AWS is promoting its earnings coverage on MRVL; touching on ADI. Get our free coverage by signing up to:

http://www.activewallst.com/registration-3/?symbol=MRVL

http://www.activewallst.com/registration-3/?symbol=ADI

Earnings Reviewed

For the three months ended on October 29th, 2016, Marvell posted earnings of $72.6 million, or $0.14 per share, compared to a loss of $57.8 million, or $0.11 per share, in the year ago same period. Earnings excluding items came in at $0.20 per share, which was above the company’s September 6, 2016, guidance range of $0.08 to $0.13 per share. Numbers topped analysts’ expectations of earnings of $0.13 per share.

Marvell’s revenues for Q3 2016 were $654 million, which represents a 4% increase from Q2 FY17 revenue of $626 million and exceeded the Company’s guidance provided on September 6, 2016. This was driven by stronger demand from the company’s storage and networking businesses, as well as from its mobile and wireless sales, which was in-line with expectations. The company’s revenue surpassed Wall Street’s forecasts of $615.89 in revenue.

Segment Results

Marvell reported that during Q3 FY17 its networking revenue decreased 16% sequentially; however it grew 20% on a y-o-y basis. The company’s Mobile and wireless revenue declined 11% sequentially, in-line with Marvell’s expectations.

Marvell’s GAAP gross margin for Q3 FY17 was 56.3%. Non-GAAP gross margin was 56.7%, significantly higher from gross margin of 45.9% posted in the year ago same period and above the high-end of the company’s guidance range provided in its Q2 FY17 earnings release. This increase was primarily driven by product mix and improvement of operational efficiency. Marvell also generated non-GAAP operating income of $115 million from $27 million a year ago. This represents an operating margin of 17.6% versus a 4% operating margin a year ago.

Balance Sheet

Marvell’s cash and marketable securities were $1.65 million, or over $3 per diluted share at the end of Q3 FY17. Net cash provided from operations in the reported quarter was $121 million. During Q3 FY17, the company resumed its stock buyback program and returned $87 million cash to shareholders, which included $30.7 million in dividends and $56.5 million in stock repurchases.

Stock Repurchase and dividend updates

In a separate press release on the same day of earnings results, Marvell announced that the Board of Directors has authorized a $1 billion share buyback program. This newly authorized stock repurchase program replaces in its entirety the prior $3.25 billion stock repurchase program, which had approximately $115 million of repurchase authority remaining. The Company currently intends to repurchase approximately $500 million worth of shares over the next 12 months.

Under the program authorized by its Board of Directors, Marvell may repurchase shares in open-market purchases or through privately negotiated transactions. In addition to the share buyback program, the Board of Directors has approved a dividend payment of $0.06 per share to all shareholders of record as of December 6, 2016. Marvell intends to pay the dividend on December 28, 2016.

Restructuring Drive

On November 2, 2016, Marvell announced restructuring actions to drive growth and profitability. The company is pursuing two initiates to lower annual operating expenses by $240 million-$260 million. The company announced that it is discontinuing specific R&D programs, streamlining engineering processes, and consolidating R&D sites for greater efficiency, which will eliminate approximately 900 positions worldwide and a significant reduction in legal and accounting costs. Altogether, these changes are expected to lower annual operating expenses by $180million-200 million.

Marvell also stated that it will be divesting non-strategic businesses with approximately $60 million in operating expenses and $100 million in revenue, based on a H1 FY17 annualized run rate. These businesses will be classified as Discontinued Operations in Q4 FY17. The company is expecting to incur charges of $90million-$110 million over the next four quarters, including cash charges of $35million-$50 million.

Earnings Outlook

Marvell announced that for Q4 FY17, the company expects net revenue to be approximately $565 million, plus or minus 2%. Marvell’s networking revenue is expected to be flat sequentially, but is forecasted to show double-digit growth on a y-o-y basis. The company’s wireless connectivity revenue is expected to decline sequentially due to normal seasonality.

During Q4 FY17, Marvell expects GAAP and net non-GAAP gross margins to be approximately between 57% to 58%. The company anticipates GAAP income in the range of negative $0.01 to positive $0.03 per diluted share, and non-GAAP income in the band of $0.17 to $0.21 per diluted share.

Stock Performance

On Tuesday, the stock closed the trading session at $14.38, slightly down 0.69% from its previous closing price of $14.48. A total volume of 3.88 million shares have exchanged hands. Marvell Technology Group’s stock price advanced 9.77% in the last month, 17.45% in the past three months, and 41.77% in the previous six months. Furthermore, since the start of the year, shares of the company have surged 65.72%. The stock has a dividend yield of 1.67%.

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