This is a summary of the first quarter fiscal 2009 earnings call conducted by Marvell Technology (MRVL) on May 29, 2008
Management:
-
Chairman, President and CEO Dr. Sehat Sutardja
-
Interim CFO George A. de Urioste
-
IR Jeff Palmer
Key Investor Issues:
- The firm recorded income of $70 million, or 11 cents per share, from a net loss of $53 million, or 9 cents per share in the prior year.
- Revenues rose 27% to $804 million from $635 million.
- Cash, equivalents and short-term investments were $774 million, up roughly $143 million sequentially.
First Quarter Highlights:
Revenue of $804 million, representing nearly 27% growth over revenue of $635 million in 2007, above the guidance range of $775 million to $785 million.
- Gross was 52%, better than the prior guidance range of 48.7% to 49.3%, and above the long-term operating model of 50%, due to better standard costs and wafer yield enhancements.
- Through focused inventory management, the firm has realized an additional 90 basis point improvement.
- Expenses were $255 million, including a $24.5 million payment received from the director and officers liability insurance carriers which had the effect of reducing operating expenses.
- The firm also agreed to pay a $10 million civil penalty in connection with the SEC settlement.
-The benefits realized relative to prior guidance were due to lower legal expenses, lower engineering related costs, such as mask costs, take-out charges, savings on engineering software costs and NREs.
The firm realized net income of $70 million, or 11 cents per share, from a net loss of $53 million, or 9 cents per share in the prior year as cost cutting initiatives implemented in prior periods also paid off.
- Cash, equivalents and short-term investments were $774 million, up roughly $143 million sequentially due to better total sales, and the balance is up 37% compared to levels of a year ago.
- In terms of positive cash flow, Marvell generated $185 million in cash from operating activities, up from $163 million in the prior quarter.
- Accounts receivable were $370 million, up $38 million sequentially on strong order linearity.
Day sales outstanding or DSOs were 40, flat sequentially from the fourth quarter and lower on a year-over-year basis from the 44 days reported in 2008.
- Inventories at period end were roughly $370 million, down $50 million sequentially as Marvell focused on improving operational efficiency.
- Days of inventory or DIO were 93 days, up sequentially from the 83 days reported in the previous quarter.
- Accounts payable were $168 million, down $63 million sequentially.
Segmental Analysis:
Storage Products
- Revenue was flat sequentially but grew over 30% on year-over-year basis though the first calendar quarter is historically the seasonally weakest period for the hard drive industry.
- The overall hard drive industry is benefiting from the continued demand for notebook PCs, which is creating positive demands for 2.5-inch drives. The trended demand for 2.5-inch drives is creating a disproportional benefit to our customers.
- Unit shipments of mobile hard drive system-on-a-chips increased on a percentage basis in the high teens sequentially.
Cellular Products
- Sales of cellular products were inline with expectations and declined modestly, but showed growth in the mid-teens.
- Demand for communication processors accelerated during the quarter on both a unit and revenue basis.
- Sales of application processors were slightly below expectations as one of the older application processor designs came to an end of life. Marvell began revenue shipments of our HSDPA products during the quarter.
Enterprise Connectivity Products:
- Sales declined sequentially in line with expectations, but were up over 30% on a year-over-year basis.
- International demand for Metro-Ethernet products continued to be robust for both new and existing products.
- This was offset by expected weakness in demand for system controllers and SMB access products.
- Marvell experienced significant sequential growth in the enterprise business during the previous fiscal quarter.
PC Connectivity Products
