Thanks to a timely acquisition in 2006, Marvell Technology Group Ltd. (NASDAQ: MRVL) finds itself on the brink of making a serious run at its 52-week high share price. The company reported earnings and revenues in line with expectations yesterday, but its most significant improvement came in its mobile and wireless market where sales grew 140% year-over-year. Broadcom Corp. (NASDAQ: BRCM), which competes with Marvell and Qualcomm in the mobile and wireless market, last month reported second quarter sales growth of 54.3% year-over-year.
Marvell’s acquired the embedded processor business of Intel Corp. (NASDAQ: INTC) in 2006, including Intel’s license permitting the company to produce its own versions of the ARM Holdings plc (NASDAQ: ARMH) processor. Only three other companies hold an ARM architecture license:
Qualcomm Inc. (NASDAQ: QCOM), Microsoft Corp. (NASDAQ: MSFT), and Infineon Technologies AG (OTC: IFNNY).
In the earnings conference call, Marvell’s CEO/chairman/president noted that 15% of the sequential growth of 50% was due to initial production of the company’s Armada processors, the latest in its line of ARM-based processors and that about 55% of the sequential growth was due to embedded WiFi products. New and existing gaming platforms were cited as primary drivers in both Armada and WiFi processor sales. The company expects third quarter sequential growth of 15%-20% in mobile and wireless products.
The company grew sales in the networking business by “a few percentage points,” which was less than Marvell had forecast. Growth was dragged down by lower PC sales. In the hard disk drive controller market, sales fell by about 15%. Looking ahead, both PC and hard drive markets are expected to be flat in the third quarter.
Marvell’s report was more evidence, if any is still needed, that sales growth in the semiconductor business depends on mobile device demand. Companies like Marvell and Qualcomm and Infineon are poised to take advantage of that growth, and the consequent growth in networking applications, where faster and more complex switches will be required to handle the exploding amount of data demanded by HDTV and video telephony applications.
Marvell shares are up around 9% as of this writing on much heavier than normal volume.
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