This summary is based on the second quarter fiscal 2008 earnings call conducted by Marvell Technology Group Ltd. (MRVL: chart) on August 23, 2007.

Chairman, President, CEO: Dr. Sehat Sutardja
Interim Chief Financial Officer: Michael Rashkin

Key Investors Issues

- EPS were a loss of 10 cents a share compared to a profit of 7 cents a share last year.
- The company reported a loss of $56.5 million compared with income of $44.9 million from the same period a year ago.
- Revenue rose 14% to $656.7 million.

Second Quarter Highlights

Revenue was $657 million, which represented a year-over-year increase of 14% and a sequential increase of 3% from the prior quarter.

Previous guidance was of approximately $645 million. As a result of strong sales in communication processors in wireless LAN businesses, revenues exceeded expectations. The sales trend is an indication that the company is starting to see pay-off from investments in a broad range of technologies and from ability to efficiently integrate these technologies into superior products across many markets.

Non-GAAP net income was $39.8 million, or 6 cents per share, and represents a 27% increase from the first quarter fiscal 2008 non-GAAP net income of $31.3 million, or 5 cents per share.

Non-GAAP net income for the second quarter 2007 was $127.8 million, or 20 cents per share diluted. Non-GAAP income was computed using a tax rate of 19.5%, rather than the 10% rate used in prior years. Shares used to compute non-GAAP earnings per share decreased to 630 million, as compared to 638 million last year.

Net loss under generally accepted accounting principles, or GAAP, was 10 cents per share compared with a net income under GAAP of $44.9 million, or 7 cents per share for the second quarter fiscal 2007.

The company has provided a reconciliation of GAAP net income to non-GAAP for the quarter.

Cell phone business had strong shipments as a result of the increased demand for customers’ smartphone products.

- The company has completed the porting of the highest volume products over to TSMC and these new products are in customer qualification stages. Other products are in the pipeline to be ported to TSMC.
- Wireless LAN has shown strong growth from the prior quarter as design wins have gone into production.

Storage experienced continued seasonality as expected.

- The company expected non-GAAP gross margin percentage would be higher than the first quarter. Actual non-GAAP gross margin percentage was consistent with expectations. Consistent with the prior quarter, gross margin reflects the fair market value of PXA inventory that was supplied under an agreement with Intel.
- Non-GAAP operating expenses reflected headcount increases, cost increases related to internal review of the company’s historical stock option practices, and a net gain of approximately $5 million due to a one-time divestment of an interest in an asset under construction.
- The company expected operating expenses would increase at a rate higher than guided revenue growth rate. Non-GAAP operating expenses for the quarter ended up lower than expected, due in part to eliminating headcount additions and the one-time gain.
- In other income and expense, net interest expense was consistent with expectations. Cash and investments declined from the first quarter by $97 million, from $593 million to $496 million, primarily due to working capital requirements.
- Accounts receivable and DSOs increased but remain in line with historical levels after accounting for increases in sales.
- Inventory increased from the prior quarter relative to sales, primarily due to the advanced purchase of inventory under Intel supply agreement. Under current forecast, the company believes this inventory will utilize under normal operations.

The company moves forward into the third quarter, it can see that investment in a broad portfolio of advanced products is starting to bear fruit.

In many cases, it has taken some time for R&D expenditures to be converted into products, products into design wins, and design wins into revenue from production. For example, many of wireless LAN design wins in the consumer and cell phone market are now in production in the third quarter, which the company expects will provide with an increase in revenue from that business in future quarters. The company expects this process to continue, resulting in strong growth in future years. The strong backlog the company is experiencing for wireless LAN products is the result of many years of investment it has in that area, and there is also similar tangible evidence of progress and growth potential in other markets in which the company has invested.

The companies continue to see strong design activity from current and new customers with PXA line of application and communication processors. Sharp launched enterprise and consumer models of PXA wireless handhelds with three carriers, Valcom, T-Mobile, and Softbank in Japan. This product used PXA processor as well as low power wireless LAN solution.

The company is pleased to see growth of RIM business as they launch products in emerging markets like India. The company saw increased engagement of first highly integrated single chip communications processor, which combines an HSDPA 3G base band with high-speed application processor.

New design wins for application processors continue to increase well beyond smartphones in existing market segments like mobile workforce handheld devices, GPS, PDAs, VOIP, as well as in other emerging embedded segments.