Marvell Technology Group Ltd. Earnings: Can Big Data Push Profits Higher?

On Thursday, Marvell Technology (NASDAQ: MRVL  ) will release its quarterly report, and shareholders have generally been pleased with the chipmaker's efforts recently. By supplying components for solid-state drives to customers Seagate Technology (NASDAQ: STX  ) and Western Digital (NASDAQ: WDC  ) , Marvell has taken advantage of the rising demand for storage solutions stemming from rise in data analytics. Moreover, Marvell's presence in the mobile market could also drive results going forward.

Marvell Technology went through a tough period two years ago, with the decline in PC sales threatening the company's stronghold in hard-disk drive storage. But alongside Seagate and Western Digital, which are major customers, Marvell has done a good job making the transition to solid-state and hybrid drive technology, while still maximizing the use of its components for enterprise-bound hard-disk drives. Moreover, with the implementation of faster-speed wireless networks around the world, Marvell could see higher sales from its mobile segment as well. Let's take an early look at what's been happening with Marvell Technology over the past quarter and what we're likely to see in its report.


Source: Marvell Technology.

Stats on Marvell Technology

Analyst EPS Estimate

$0.22

Change From Year-Ago EPS

15.8%

Revenue Estimate

$892.25 million

Change From Year-Ago Revenue

22%

Earnings Beats in Past 4 Quarters

4

Source: Yahoo! Finance.

Can Marvell earnings keep growing?
In recent months, analysts have marked up their views on Marvell earnings, adding a penny per share to their first-quarter estimates and raising their full-year projections by about 3%. The stock has stayed relatively stable, adding just 1% since mid-February.

Marvell's fourth-quarter report didn't stand up to shareholder expectations, with shares giving up ground after its release. Yet revenue climbed 20% from the year-ago quarter, with adjusted earnings per share jumping by more than half. Moreover, Marvell's revenue guidance for the first quarter was higher than investors had expected. Still, with the stock having posted huge gains in 2013, anything short of perfection was bound to be somewhat of a disappointment.

Source: Marvell Technology.

Marvell has had success on two main fronts. On one hand, Marvell provides components for hard-disk drives, solid-state drives, and other storage devices, counting Western Digital and Seagate Technology among its major customers. Marvell has gained market share in the hard-disk market, as enterprise customers find uses for older-style PC technology to handle the huge amounts of data that the big-data initiative is producing. At the same time, Marvell has jumped into the solid-state market, with revenue from the segment having doubled over the past year.

The other main area Marvell has focused on is mobile. Marvell makes LTE products, and with China's biggest wireless company rolling out 4G LTE service, LTD chipsets from Marvell should see rising demand from the emerging-market nation. Smartphone giant Samsung also selected a Marvell platform for its popular Galaxy smartphone for its Chinese consumers using that carrier, giving Marvell further exposure in the lucrative market.

Marvell got news from the legal front that reassured some shareholders, as a judge ruled that Carnegie Mellon University was entitled to $1.54 billion in damages from Marvell for patent violations. That's a huge award, but Carnegie Mellon failed to receive the triple-damages it had requested, and Marvell shareholders gave a sigh of relief at the news.

In the Marvell earnings report, watch to see how the company responds to changing conditions in the data analytics and mobile sectors. With so much riding on the health of its storage and mobile-chip offerings, Marvell Technology needs to see the tailwinds that have helped it grow continue well into the future.

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