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Monday, October 02, 2006

Marvell Tech Issues Revenue Warning; Shares Halted

Marvell Technology (MRVL) announced a double-whammy in after-hours, and its shares halted. It confirmed date discrepancies between options stated dates and actual dates and said the earnings statements back to 2000 could no longer be relied upon, like that was a surprise. The real killer though is that the company came clean and lowered guidance. The lowered sequential revenues of Q2's $574 million down to -10% on a sequential basis, which brings the net down to $516.6 million. Unfortunately, that is shy of the $582.4 million consensus estimate.

The anticipated decline in net revenue is largely due to lower than expected demand from a number of the Company's hard disk drive customers. The Company believes the shortfall of demand is primarily due to a combination of weaker than normal seasonal shipments in the personal computer market as well as excess inventory held by some of its significant storage customers. It also expects a significant increase in its general and administrative expenses in its third quarter of fiscal 2007 due to higher than expected costs related to its previously announced and ongoing internal review by a special committee of its Board of Directors relating to the Company's historical stock option practices and related accounting matters.

Marvell (MRVL) is halted, but this instantly peeled off another 3% of its pseudo-rival Broadcom (BRCM values, by taking it down $0.98 from its close to $29.87.

Jon C. Ogg
October 2, 2006
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