Morningstar | MRVL Updated Forecasts and Estimates from 25 Feb 2019
On Wednesday Feb. 6, Marvell Technology provided revised guidance for its upcoming fourth quarter for fiscal 2019. Management now expect revenue to total between $735 million and $745 million when results are announced in March, a downward revision of nearly 9% from the midpoint of the prior revenue guidance. The expected revenue miss is as a result of lower demand for storage controllers which is expected to continue into the first quarter of fiscal 2020. Based on Seagate and Western Digital’s announcements over the past few weeks, weak demand for the firm’s storage controllers amid a pause in cloud investment, CPU shortages, and an uncertain macroeconomic environment, is not entirely surprising. That said, the severity is significant. While we will maintain our fair value rating for now based on the understanding that, like the demand for the Western and Seagate’s products, demand for controllers will bounce back significantly when inventory digestion is complete and cloud investment begins again in earnest, we are eager for further confirmation in the firm’s upcoming call on March 7.Marvell Technology Group is a semiconductor provider of application-specific products. The company is focused on the development of System-on-a-Chip devices, utilizing its technology portfolio of intellectual property in the areas of analog, mixed-signal, digital signal processing, and embedded and standalone integrated circuits. The company develops integrated hardware platforms along with software that incorporates digital computing technologies. In storage, the company is engaged in fibre channel products and data storage controller solutions spanning cloud, enterprise, edge and personal computing markets. The company's networking products include ethernet solutions, embedded processors and WiFi connectivity solutions.
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