Investors are punishing
Marvell Technology Group
stock in after-hours trading Thursday after the company warned of supply constraints that are preventing it from filling all the demand for the semiconductors it makes.
Marvell (ticker: MRVL) missed third-quarter revenue expectations by $1 million when it reported earnings late Thursday, and issued a range of guidance for the fiscal fourth quarter because of the continuing uncertainty resulting from the Covid-19 pandemic.
Shares of Marvell are down 4.7%, at $43.40, in the extended session, after closing the regular trading day down 0.2%, to $45.52.
The company said its revenue grew because of product ramp-ups for its 5G-related chips and the various semiconductors it sells needed for cloud computing. Marvell CEO Matt Murphy said that demand for Marvell’s products continues to rise, but that the company was facing supply constraints. It wasn’t immediately clear how much that affected profit and sales.
Marvell reported a fiscal third-quarter net loss of $23 million, which amounts to 3 cents a share, compared with a net loss of $157.9 million, or 24 cents a share, a year ago. Revenue rose to $750 million from $727.3 million in the year-ago quarter.
Adjusted for amortization of acquired intangible assets and stock compensation, non-GAAP earnings were 25 cents a share, in line with the consensus estimate. The consensus for revenue was for revenue of $751 million.
Marvell said it expects adjusted earnings of 25 cents to 33 cents a share and sales of $745.8 million to $824.3 million. Analysts modeled fiscal fourth-quarter adjusted earnings of 29 cents a share and sales of $768.3 million. In addition to the coronavirus-related issues, Marvell also said the guidance takes into account U.S. government restrictions on exports to some Chinese customers.
Amid a wave of consolidation in the semiconductor sector, Marvell announced it planned to acquire
(IPHI) for $10 billion in cash and stock. At the time, Murphy told Barron’s that the purpose was to increase the company’s scale in order to have a bigger portfolio of products to sell to existing customers, and help with other aspects of the business such as research and development costs.
Of the analysts that cover Marvell, 21 have Buy ratings, six rate the name a Hold, and one analyst recommends selling shares. The average target price is $46.83, which implies an upside of 2.9% from Thursday’s closing price.
Shares of Marvell have gained 71% this year, while the
PHLX Semiconductor index
has risen 47%.
Write to Max A. Cherney at [email protected]