If you like Marvell Technology
The chip designer has never been more profitable than it is today. Its wireless-networking and storage-controller divisions still contribute the vast majority of Marvell's revenue, but the up-and-coming application processor segment that the company originally acquired from Intel
The Armada processors command strong margins and are increasingly making their presence felt in Armada’s bottom line. This helps explain why Marvell's gross margin continues to run at historically high levels. Rampant sales growth, combined with economies of scale, then leads to record-level net profits and cash flows.
Sure, there's plenty of competition in the mainline processor market for mobile systems, but everyone does it a little differently, and Marvell should find its niche in short order. In the networking industry, it can be harder to differentiate a Marvell Wi-Fi chip from an equivalent product by Atheros Communications
In the third quarter, all this boiled down to 20% year-over-year revenue growth and 23% stronger earnings for Marvell. That's better than the analyst consensus on both counts, and Marvell's stock jumped nearly 7% on the news. The company's cash flows have been strong for a long time; would it surprise you to learn that Marvell has more cash on its balance sheet than household name Texas Instruments
That's what you get for delivering the right technologies at the right time, something Marvell has had a knack for in recent years. The Fool owns this stock partly for that very reason. Maybe you should, too.