Can Marvell Technology Beat Out Broadcom and LSI?

Marvell Technology Group (MRVL 3.17%) will release its quarterly report on Thursday, and investors have seen the stock soar to its highest levels of 2013 as interest rises in the company. Yet even as certain technology stocks have started to gain traction among investors recently, can Marvell outpace rivals Broadcom (NASDAQ: BRCM) and LSI (NASDAQ: LSI) to capture the maximum growth available from the industry?

Marvell Technology has three main segments in which it operates, making products related to the networking, storage and mobile and wireless businesses. In storage, its hard-disk-drive controllers have provided a regular stream of cash for years. But the increasing importance of mobile and wireless solutions has given Marvell the chance to sell connectivity-enhancing chips and integrated processors for smartphones and other mobile devices. Networking is also an area of high potential for Marvell, as Broadcom and other competitors have also seen great success there. Let's take an early look at what's been happening with Marvell Technology Group over the past quarter and what we're likely to see in its report.

Stats on Marvell Technology Group

Source: Yahoo! Finance

Can Marvell earnings keep growing?
Analysts have boosted their views on Marvell earnings in recent months, raising their October-quarter estimates by $0.01 per share and their full-year fiscal 2014 projections by $0.05 per share. The stock has climbed about 7% since mid-August.

Marvell worried investors early in the quarter, despite reporting July quarter earnings results that by several measures were stronger than most had expected. Storage controllers for both hard-disk drives and solid-state drives saw solid growth, and successes in mobile could arguably offset the challenges that Marvell faces in its networking segment. Still, Marvell's failure to keep up with Broadcom's networking growth led investors to bid shares lower.

In addition, Marvell looks increasingly likely to lose a major legal verdict. The company had hoped to have a federal court grant a new trial to overturn an outstanding $1.17 billion jury verdict in a suit that Carnegie Mellon University had filed in a hard-drive infringement case, but that request was denied in September. Marvell intends to appeal the decision to the Court of Appeals for the Federal Circuit once its post-trial motions are all resolved, but it's uncertain whether it will fare better at the appellate level.

But one major issue that emphasizes Marvell's potential advantages over Broadcom and LSI came earlier this month, when rumors that Kohlberg Kravis Roberts had bought a 5% position in Marvell raised speculation about a full-out takeover bid. KKR believes that Marvell could win its lawsuit, freeing up more than $1.7 billion in cash to help make a leveraged buyout a lot easier to manage. Moreover, KKR's confidence that the decline in the PC market won't hurt Marvell's hard-disk drive business as much as many fear helped give shareholders the bullishness to drive share prices higher.

In the Marvell earnings report, watch to see the extent to which the company keeps relying on Western Digital, which accounted for almost a quarter of Marvell's overall sales in its previous fiscal year. If it can continue the trend of getting rivals like Seagate on board, then Marvell could press its advantage against LSI and Broadcom well into the future.

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