Marvell Technology: Feeling the Pain from Tablet Megatrend?

Posted Mar 4th 2011 12:00PM by Tom Taulli
Filed under: Marvell Technology Group (MRVL)

Over the years, Marvell Technology (MRVL) has built a solid business in developing chips for PC storage. The problem is that, with the emergence of tablets, the market is feeling some pressure. While Marvell has been moving hard into the mobile space, the results have been muted.

So, it should be no surprise that the company's recent earnings report was fairly lackluster. In fact, the shares were off 8% to $16.75 in morning trading.

In the quarter, Marvell posted a profit of $222.9 million, or $0.33 per share. When adjusted for stock compensation and one-time items, the earnings were $0.40 per share. But the Wall Street consensus was for $0.42 per share.

As for revenues, they increased by 7% to $900.5 million. However, yet again, it came in below the consensus of $925.3 million.

Over the next few quarters, Marvell should be able to regain its footing. The fact is that the company has a standout technology platform and should benefit from the fast-growing mobile market.

But for investors, this is a long time to wait. In other words, the stock may not have much reason to move for a while. Actually, for those who want a more direct play on mobile, a much better bet would be a company like Qualcomm (QCOM).

Tom Taulli is the author of several books, including the Complete M&A Handbook and All About Short Selling.

Tags: inthenews, Marvell earnings, Marvell Technology, MRVL, QCOM, Qualcomm, Tablet PCs