It would be hard to tell from the stock price, but Marvell Technology (NASDAQ:MRVL) has finally turned the corner. For last year, revenue rose 27% to $622 million. Because the company is caught up in the options back-dating scandal it cannot report complete earnings, but the magnitude of the increase was enough to get Wall Street's attention.
Marvell bought Intel's (NASDAQ:INTC) communications chip business last year, and investors seem to be convinced that the integration has gone well.
Since full results may not be available for months, analysts are split on what the company's margins will be. Needham upgraded the company because they thought Marvell's outlook was stronger than expected.
It is easy to understand investor frustration with the company, options problems aside. The stock is only up 10% over the last two years and is down almost 40% over the last twelve months. Marvell builds hardware for handsets, VoIP, digital entertainment and WiFi. Since all of these market are growing faster, the question is why isn't Marvell doing better?
With significant growth in the last quarter, Marvell may be answering that question. But, if final financial results show that the growth is being bought at the expense of margins, the investor environment for the company is going to turn ugly.
Douglas A. McIntyre is a partner at 24/7 Wall St.
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