Boston, MA 05/23/2014 (wallstreetpr) – Marvell Technology Group Ltd. (NASDAQ:MRVL) witnessed a slip in its quarterly gross margin after its profitable 4G LTE chips saw a substantial less demand as against a higher demand for its 3G chips. The shares of the company lost nearly 3% during the after hours trade, even as Marvell reported better-than-expected results.
China Demand
The Marvell Technology Group Ltd. (NASDAQ:MRVL)’s Chief Financial Officer, Michael Rashkin said during the conference call that though margins came slightly below from the set expectations, but 4G LTE was still able to do well during the quarter. He agreed that the demand was more skewed towards 3G this time. The company said that at present China is taking the lead as a region for Smarphone sales growth as against North America earlier, where buyers prefer low priced handsets below a price range of $200 over expensive devices like Apple’s iPhone.
Better Than Expected
During the quarter, Marvell’s gross margin slipped from 54.3% a year ago to 48.4% in the reported quarter. Marvell Technology Group Ltd. (NASDAQ:MRVL) now expects second quarter adjusted profit to come minus or plus two cents from $0.28 per share and revenue in the range of $940-$980 million. The Wall Street expectations are at $0.26 per share on revenue of $930.1 million for the second quarter. Analyst at RBC Capital markets say that the second quarter should see some improvement due to a positive mix shift and resultantly an uplift in the gross margin.
Marvell Technology Group Ltd. (NASDAQ:MRVL)’s first-quarter net income grew 99.5 million or $0.19 per share from that of $53.2 million or $0.11 per share last year, while excluding items it came in at $0.27 per share. Revenue soared by 30% to 957.8 million. The market consensus for earnings per share and revenues were at $0.22 per share and $892.2 million respectively. The company has been able to derive benefit from its multi-billion launch of 4G LTE networks in China, which forms a third of its revenues at present.
