Marvell Technology Group (NASDAQ: MRVL) late Thursday announced first-quarter earnings, excluding items, of a nickel per share, matching the Street's expectations. A year ago, the chipmaker earned 24 cents per share. Quarterly revenue fell 34% to $521.4 million, far short of last year's $804.8 million but better than the consensus estimate. Unfortunately for Marvell, the revenue expectations on the Street were actually higher, calling for "anywhere from $530 to $540 million," which is "why, when revenue came in at $520 million, although it was better than guidance, it was below the whisper expectations," Barclay's Capital analyst Romit Shah explained.
The shares initially dropped but managed to come back a bit. Why? The company issued a strong second-quarter forecast thanks to stronger orders and cost cuts. For the second quarter, Marvell expects earnings between 7 cents and 13 cents per share on revenue between $540 million and $580 million. This forecast tops expectations calling for earnings of seven cents per share and revenue of $531.58 million.
Glancing at a weekly chart of Marvell, it appears that the stock may be ready to make a run at overhead resistance from its 50-month moving average. The shares have not challenged this moving average since the middle of 2008 - but support from the equity's 10-week moving average could help along the way. Indeed the stock is poised for a run higher. Let's see if the positive second-quarter forecast can outweigh the disappointing first-quarter revenue.
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