Reuters: Global Markets: Weak PC sales, China slowdown weigh on Marvell outlook

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Weak PC sales, China slowdown weigh on Marvell outlook Aug 16th 2012, 22:06 Thu Aug 16, 2012 6:06pm EDT (Reuters) - Chipmaker Marvell Technology Group Ltd's (MRVL.O) current-quarter results may miss expectations on faltering growth at its lucrative mobile phone chips business in China and continued slowdown in PC sales. The profit warning sent the company's shares down as much as 10 percent in extended trade. "Revenue from TD smartphone customers in China declined due to slower-than-expected demand and increased competition," Chief Executive Sehat Sutardja said on a call with analysts. Marvell makes processing chips for phones that run on the TD-SCDMA network, a 3G technology used in China, and has gained from booming smartphone sales in the world's most populous country. The company said it expects its mobile and wireless end-market sales to decline in the mid-single digits in the current quarter. Marvell forecast a third-quarter profit of 22 cents to 24 cents per share on revenue of $800 million to $850 million. Analysts were looking for a profit of 31 cents per share on revenue of $914.9 million, according to Thomson Reuters I/B/E/S. Falling PC and hard disk drive (HDD) sales also contributed to the muted outlook, and Marvell said demand would be flat for the current quarter. The company is a key supplier for microcontrollers used in HDDs sold mainly by Western Digital Corp (WDC.O). "For those who were paying attention to the disk drive market during the quarter, this is not much of a surprise," RBC analyst Doug Freedman said, referring to slowing hard drive shipments. SECOND-QUARTER MISS Weak outlook for consumer electronics and woes at key customer Research in Motion (RIM.TO) have largely kept Wall Street expectations at check and pushed the stock down almost 30 percent in the last six months. Marvell lagged Wall Street's expectations for the first time in five quarters. Second-quarter profit fell to $93 million, or 16 cents a share, from $192 million, or 31 cents a share, a year earlier. Excluding one-time charges, it earned 24 cents a share, 2 cent short of analysts' expectations, according to Thomson Reuters I/B/E/S. Revenue fell 9 percent to $816 million, compared with expectation of $852 million. Shares of the company were down 8 percent at $11.40 in extended trade on Thursday. (Reporting by Himank Sharma in Bangalore; Editing by Saumyadeb Chakrabarty) Link this Share this Digg this Email Reprints

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