Marvell Technology drops on 1Q outlook
NEW YORKShares in chip maker Marvell Technology Group Ltd. dropped Friday after analysts pointed out its first-quarter outlook paled next to its solid fourth-quarter results.
The company said Thursday it expects sales of $775 million to $785 million for its fiscal 2009 fiscal first quarter.
Analyst polled by Thomson Financial expect sales of $763.9 million.
Although the outlook beat Wall Street estimates, some analysts said it was still a substantial drop from its strong 2008 fourth-quarter sales of $844.7 million.
Oppenheimer analyst Allan Mishan said in a note to investors that the company had a "blowout quarter" but its first-quarter outlook is not good enough to push his 2009 earnings-per-share estimate higher.
"April is typically seasonally down but we would have expected a smaller drop," he said.
Mishan said Marvell was capable of higher revenue as new cell-phone, processor and other markets improve later in the year.
He cited the company's lack of a chief financial officer as one of the company's internal problems and he hoped a new appointee comes with a focus on expense control.
Mishan also introduced a 2010 earnings-per-share estimate of 90 cents on sales of $3.9 billion.
Stifel, Nicolaus & Co. analyst Cody Acree said that the company's impressive growth and improving margins are helping to rebuild credibility with investors.
He noted that the company's first-quarter sales outlook clearly exceeds Wall Street expectations but said the company may suffer a short-term share decline because of the larger-than-expected contrast between its booming fourth-quarter sales and its expected first-quarter results.
Marvell shares fell 85 cents or 7.3 percent to $10.66 in afternoon trading.