In June of last year, I predicted that chipmaker Marvell (MRVL -3.25%) would be the next company to exit the cutthroat mobile applications processor and cellular baseband market. Indeed, in recent quarters, the business has been something of a money sink for the company.

It doesn't come as much of a surprise to me, then, that Marvell put out a press release on Sept. 24 announcing "a significant restructuring of its mobile platform business." Indeed, it would appear that Marvell -- like so many other companies before it -- is finally exiting the smartphone applications processor and baseband market.

The financials were really ugly
Before this announcement, Marvell hadn't, to my knowledge, publicly provided financial figures for its mobile chip business. According to the company, its mobile platform business generated just $122 million in revenue and a paltry $13 million in gross profit.

Marvell says that this restructuring will lead to an annualized operating expense reduction of between $170 million and $220 million. Taking the midpoint of this operating expense range, and assuming that such expenses are evenly distributed across the year, this would imply that the company's mobile platform business lost $84.5 million in the first half of the year.

That's a lot of money for a company like Marvell.

Did Marvell really think it could take on Qualcomm and MediaTek on this relatively meagre budget?
Even though Marvell was incurring significant losses pursuing the mobile platform market, it's fairly clear that the company was underspending relative to its key competitors in this market.

The fact that Marvell expects to save between $170 million and $220 million in operating expenses as a result of this restructuring ($195 million at the midpoint of the range) gives us an upper bound as to the company's mobile platform-specific research and development spending.

Keep in mind that Marvell was hoping to capture share from the likes of MediaTek and Qualcomm (QCOM -0.85%), both of which spend substantially more in the development of mobile platforms.

Though it's important to note that Marvell's mobile platform efforts likely leveraged technologies from Marvell's non-mobile wireless businesses, even counting that spending wouldn't put Marvell's mobile research and development spending in the same league as MediaTek's, let alone Qualcomm's.

This is a good, shareholder friendly move
Given the terrible financials of the company's mobile platform business, and given the increasingly cutthroat competitive environment (there are fewer players left, but the remaining ones are becoming stronger), this was clearly the right move for Marvell.

Although the company can no longer count mobile platforms as a potential growth driver, its profitability should be much improved, which could potentially fuel long-term gains in the company's stock price.

I'm still not buying Marvell, though
Marvell's exit from the mobile platforms business is certainly a positive, but is it enough to offset the very clear negatives around the company? For one, investors shouldn't forget that the company failed to file its form 10-Q on-time due to a recently disclosed "independent investigation of certain accounting and internal control matters" in its most recent quarter, and still hasn't given investors a time-frame for when it expects to file.

Potential accounting issues aside, Marvell's business continues to face a number of challenges. In its preliminary second quarter earnings release, the company is seeing "softening demand" for some of its products, particularly in storage (48% of revenues last quarter), due to both a "weaker global economy and a slow-down in the PC market."

Marvell's networking business (21% of revenues last quarter) also isn't doing all that great, with the company reporting an 11% year-over-year drop in sales there. Competitor Broadcom (NASDAQ: BRCM), on the other hand, reported seeing a slight year-over-year increase in this segment, potentially signaling share loss on Marvell's part.

All told, until there are clear signs that things are getting better for Marvell's business, I don't plan to purchase the company's stock. In this market, there are far better places that I can think of to put my hard-earned investment dollars.