SAN FRANCISCO—Several analysts downgraded Marvell Technology Group Ltd.'s stock Friday (Oct. 19) after the chip firm cut its third quarter sales outlook and announced the departure of its chief financial officer.
Marvell (Santa Clara, Calif.) is the latest chip vendor to announce lower than expected quarterly sales amid macroeconomic sluggishness and weak PC demand. Marvell has heavy exposure to the PC market as a leading supplier of chips for hard disk drives (HDDs).
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Marvell said it now expects net revenue for its fiscal third quarter, which closes Oct. 27, to be between $765 million and $785 million, down from a previous forecast of $800 million to $850 million. The midpoint of the new sales target would represent a decline of 5 percent compared to the previous quarter and 18 percent compared with the year ago quarter.
"The continued slowdown in the global economy during the third quarter is resulting in a weaker PC market than previously anticipated and thus lower demand from our storage HDD customers," Sehat Sutardja, Marvell's chairman and CEO, said in a statement.
Sutardja said Marvell's revenue from the solid-state drive, networking and mobile markets are tracking in line with prior expectations. But he added that business visibility remains low headed into the fourth quarter, which is traditionally softer.
Craig Berger, an analyst with FBR Capital Markets, said in a report circulated Friday that he believes HDD shipments will fall by more than 10 percent in the third quarter and fall again in the fourth quarter. Berger also cited an expected poor reception to Microsoft's Windows 8 operating system in coming months.
"Clearly weak global demand, the Win8 production/purchasing 'air pocket,' and smartphone tablet cannibalization are affecting PC shipments, with any 2013 recovery seeming of questionable magnitude for now," Berger wrote. He said 40 to 45 percent of Marvell's business is exposed to the PC market.