Published in PC Hardware

Marvell expects falling revenue

by on01 December 2023

Miserable time to be alive

Marvell said it’s expecting its revenue to decline as it enters the final quarter of the fiscal 2024 year, and its stock was trading more than four per cent lower in the after-hours session today.

The dismal prediction took the shine off what should have been a decent quarter for Marvell, which beat analyst’s targets on earnings and revenue.

In the third quarter, the computer chipmaker delivered earnings before certain costs such as stock compensation of 41 cents per share, down from a profit of 57 cents one year earlier but above the Street’s consensus estimate of 40 cents. In terms of revenue, Marvell took in $1.42 billion, down eight per cent from a year earlier but exceeding the Street’s forecast of $1.4 billion.

Marvell logged a net loss of $164.3 million in the quarter, having recorded a small profit of $13.3 million a year-ago quarter.

Marvell is a key player in the world of automotive, data storage and networking chips. Its primary customers are automotive companies, cloud computing providers and communications firms. The company is much smaller than fellow chipmakers such as Intel and Nvidia but claims to be a rising player in the artificial intelligence industry thanks to the capabilities of its networking chips.

During the quarter, Marvell’s data center revenue declined 11 per cent, to $556 million, but still came in ahead of the consensus estimate of $525 million. On the bright side, revenue from that segment was up more than 20 per cent on a sequential basis, and officials predict more than 30 per cent sequential growth in the current quarter.

Marvell President and Chief Executive Matt Murphy hailed the growing strength of the company’s data centre segment. “The real question is the data center strength and how does that continue?” he asked. “It’s too early to call.”

The reduced revenue stems from the fact that many of the company’s customers are still working through their existing chip stockpiles, which occurred after the COVID-19 pandemic-fueled buying spree tailed off. As customers work to clear their inventories, it damages the prospects for companies such as Marvell.

Murphy added that the company does expect to see year-on-year growth in the data centre business as it enters fiscal year 2025.

Marvell’s carrier infrastructure unit saw revenue growing by 17 per cent from a year earlier, to $316.5 million. The automotive and industrial segment grew even faster, with sales rising 26 per cent, to $106.5 million. The enterprise networking and consumer segments saw sales decline. The former generated revenue of $271.1 million, down 17 per cent, while the latter pulled in $168.7 million in sales, down five per cent.

“The diversification of our portfolio is serving us well, with strong growth from AI and cloud carrying us through a softening demand environment in other end markets,” Murphy said.

“These dynamics are reflected in our forecast for overall revenue to be flat sequentially in the fourth quarter at the midpoint of guidance.”

Marvell is forecasting total fourth-quarter revenue of $1.42 billion, plus or minus five per cent, below the Street’s forecast of $1.46 billion.


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