Can Marvell Technology Keep Up in Mobile?

Tomorrow, Marvell Technology (MRVL +0.30%) will release its latest quarterly results. The key to making smart investment decisions on stocks reporting earnings is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise.

Marvell Technology has historically made a name for itself selling storage controllers for hard-disk drives in PCs and notebook computers. But with PC sales dwindling, Marvell has also tried to cash in on the mobile revolution, making a variety of analog, digital, and mixed-signal microprocessors for smartphones and tablets. Can the company make a successful transition? 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 quarterly report.

Stats on Marvell Technology

Source: Yahoo! Finance.

Can Marvell Technology make mobile pay this quarter?
Marvell's earnings prospects have gotten a bit more promising lately, as analysts have boosted their estimates for the April quarter by $0.01 per share and added $0.05 to their full-year EPS consensus. The stock has performed even better, rising about 25% since mid-February.

The big challenge that Marvell has had to face going back well beyond the past quarter is the decline on the PC side of its business. In particular, Western Digital (WDC 0.97%) and Seagate Technology (STX +0.00%) have been at the forefront of consolidation in the hard-drive industry, buying up operations from former rivals and thereby concentrating Marvell's exposure to a shrinking number of players in the space. Yet both Western Digital and Seagate have had to look to create hybrid solid-state/hard-disk drives to stay competitive with pure solid-state drives. If either company decides that Marvell's controller chips aren't necessary, it would have a huge impact on Marvell's overall business.

In response, Marvell has turned to mobile for growth, and its new PXA1088 quad-core processor is designed to attack the low end of the mobile market. With these chips, the company isn't trying to compete with faster products like those from Qualcomm, which ended up replacing Marvell as the primary chip provider to BlackBerry several years ago. Rather, it's aiming squarely at emerging-market countries, where cost-effectiveness is far more important than state-of-the-art technology.

Nevertheless, Marvell won't have the mobile market to itself either. Despite Qualcomm's advances, it also has an extensive arsenal of lower-range chips and technology that allow it to do extremely well in lower-end markets. NVIDIA (NVDA +0.93%) has also shared Marvell's difficulty in staying relevant in the high-end smartphone market, but part of NVIDIA CEO Jen-Hsun Huang's vision for the chip maker involves using less advanced versions of its Tegra and Icera chips to power cheaper devices in the emerging-market world.

In Marvell's quarterly report, watch to see whether the company continues to see more of a revenue shift toward mobile and away from storage. Eventually, Marvell will have to make a full transition in order to keep its growth prospects as strong as possible.

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