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Thursday, August 17, 2006

Most Actives: Marvell Technologies Getting Trounced After-Hours

Marvell Technologies (MRVL) isn't looking too Marvell-ous after-hours. The results have completely caught the street off guard, because it had been running up in recent days. The company is also delaying its filing pending its options review.

Revenues were $574 million, up 47% from last year and and up about 10% or $53 million sequentially. Unfortunately that is short of the $583 million estimate, and that won't cut it for a high growth and high beta name.

The quotes have a more cautious tone than in prior quarters as well. "Our Q2 revenues marked our 35th consecutive quarter of revenue growth" stated Dr. Sehat Sutardja, Marvell's President and CEO. "During the quarter our revenue growth was limited due to some near term challenges in some of our end markets. However, we remain very focused on the execution of our long term growth strategies and are excited about the expanding reach of our technology into an increasing number of end markets and applications."

The stock had climber from a $17.48 close on Monday, August 14 up to as high as $21.25 intra-day, but closed at $20.48. It is now down over 7% to $19.01 in after-hours trading. We noted earlier in the week that investors were seemingly giving more interest to Broadcom (BRCM) as the closest competitor. Broadcom closed at $30.05 today, but are down at $29.30 on the Marvell underperformance. Broadcom's closing price on Monday, August 14 was $26.11.

Marvell is one-month behind Broadcom in reporting the quarter, so it looks like the street is trying to digest if this is systematic or if it is specific. There will probably be some mixed analyst calls tomorrow, but the street is not all that used to the company missing estimates. You have to wonder if these supposed weak FCC WiMax spectrum auctions are also weighing on the opportunities, but that is still ongoing.

Jon C. Ogg
August 17, 2006

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