Marvell Technology Group Ltd. Reports First Quarter of Fiscal 2017 Financial Results

(PRNewswire) —   Marvell (NASDAQ: MRVL), a world leader in storage, cloud infrastructure, Internet of Things (IoT), connectivity and multimedia semiconductor solutions, today reported financial results for the first quarter of fiscal year 2017, ended April 30, 2016.  

Key First Quarter of Fiscal 2017 Highlights               

  • Revenue: Q1 FY 2017, $541 Million
  • GAAP Net (Loss): Q1 FY 2017, ($23) Million
  • GAAP Diluted (Loss) Per Share: Q1 FY 2017, ($0.04)
  • Non-GAAP Net Income: Q1 FY 2017, $7 Million
  • Non-GAAP Diluted EPS: Q1 FY 2017, $0.01     
  • Cash Flow from Operations: Q1 FY 2017, ($610) Million
  • Cash and ST Investments: $1.6 Billion

Second Quarter of Fiscal 2017 Financial Outlook

Marvell's financial outlook does not include the potential impact of future share repurchases, pending litigation matters, business combinations, asset acquisitions or other investments that may be completed after July 26, 2016.

  • Revenue is expected to be in the range of $625 Million to $635 Million.
  • GAAP and Non-GAAP Gross Margins are expected to be in the range of 52 percent to 54 percent. 
  • GAAP Operating Expenses are expected to be in the range of $307 Million to $317 Million.  Non-GAAP Operating Expenses are expected to be in the range of $270 Million to $280 Million.
  • GAAP Diluted EPS are expected to be in the range of $0.03 to $0.05.  Non-GAAP Diluted EPS are expected to be in the range of $0.10 to $0.12.

First Quarter of Fiscal 2017 Summary

Revenues for the first quarter of fiscal 2017 were $541 million, down approximately 12 percent from $616 million in the fourth quarter of fiscal 2016, ended January 30, 2016, and down approximately 25 percent from $724 million in the first quarter of fiscal 2016, ended May 2, 2015.

In the first quarter of fiscal 2017, storage revenue declined 16 percent sequentially, reflecting lower HDD industry demand partially offset by growth in SSD.  Networking revenue in the first quarter of fiscal 2017 grew 5 percent sequentially due to improved enterprise networking demand.  Mobile and wireless revenue decreased 29 percent sequentially, mainly driven by the previously anticipated declines in revenue resulting from Marvell's exit of the mobile handset business. Mobile handset revenues in the first quarter of 2017, fourth quarter, and first quarter of fiscal 2016 were $22 million, $69 million and $65 million, respectively.  The Company anticipates mobile handset platform-related revenue to decline through fiscal year 2017 due to the restructuring actions announced on September 24, 2015. 

GAAP net loss for the first quarter of fiscal 2017 was ($23) million, or ($0.04) per share (diluted) compared with a GAAP net income of $4 million, or $0.01 per share (diluted), for the fourth quarter of fiscal 2016, and GAAP net income of $14 million, or $0.03 per share (diluted), for the first quarter of fiscal 2016.

Non-GAAP net income for the first quarter of fiscal 2017 was $7 million, or $0.01 per share (diluted), which included adjustments of approximately $29 million including: $4 million for restructuring, of which $1 million was related to the mobile handset platform business, and $25 million for share-based compensation. By comparison, non-GAAP net income for the fourth quarter of fiscal 2016 was $55 million, or $0.11 per share (diluted), which included adjustments of $50 million including: $4 million for restructuring related to the mobile handset platform business, $32 million for share-based compensation, $4 million for litigation reserves and settlements, and $10 million for other items. Non-GAAP net income for the first quarter of fiscal 2016 was $71 million, or $0.13 per share (diluted), which included adjustments of $57 million including: $33 million for share-based compensation and $24 million for other items. Refer to the GAAP to Non-GAAP reconciliation table and related footnotes contained in this press release for more details.

Marvell reports net income, basic and diluted net income per share, in accordance with generally accepted accounting principles (GAAP) and on a non-GAAP basis as outlined below. Reconciliations of GAAP net income to non-GAAP net income for the three months ended April 30, 2016, January 30, 2016, and May 2, 2015, appear in the financial statements below.  Non-GAAP net income, where applicable, excludes the effect of share-based compensation, amortization and write-off of acquired intangible assets, acquisition-related costs, restructuring and other related charges, estimated litigation reserves and settlements, and certain expenses and benefits that are driven by discrete events that management does not consider to be directly related to Marvell's core operating performance. 

GAAP gross margin percentage for the first quarter of fiscal 2017 was 52.1 percent, compared to 50.9 percent for the fourth quarter of fiscal 2016 and 51.5 percent for the first quarter of fiscal 2016.

Non-GAAP gross margin percentage for the first quarter of fiscal 2017 was 52.5 percent, compared to 51.9 percent for the fourth quarter of fiscal 2016 and 51.6 percent for the first quarter of fiscal 2016. The sequential improvement in fourth quarter GAAP and Non-GAAP gross margin percentages was mainly due to a larger mix of higher margin networking sales and a smaller mix of lower margin mobile handset platform-related revenues compared to the prior quarter.  Refer to the GAAP to Non-GAAP reconciliation table and related footnotes at the end of this press release for more details.

Operating expenses on a GAAP basis for the first quarter of fiscal 2017 were $311 million, unchanged from the fourth quarter of fiscal year 2016, and 14 percent lower compared to $360 million in the first quarter of fiscal 2016. 

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