After Three Years, Make Them Stop (MRVL)

“When will the selling stop?” is a question traders must ask when it comes to shares of Marvell Technology Group (NASDAQ: MRVL). The stock hit a new annual low this afternoon when shares traded for $8.67. Shares are now trading at levels not seen in over three and a half years.

The latest leg in the downward spiral for shares prices came on August 16 when the company announced financial results from its second quarter of 2013. Revenues for the quarter showed a decline of 9% from the same quarter in the previous year and net income sequentially remained flat.

Adding insult to injury, word spread of a trade on Friday involving the selling of 2500 November call options (equivalent to 250,000 shares) with a strike price of $9.00 on the stock. Obviously, someone does not believe the stock has much upside potential in the near term.

One writer for the investment site The Motley Fool seemed to disagree as he summarized the bad and the good about Marvel Technology. Research in Motion (NASDAQ: RIMM) is Marvell’s largest processor who recently reported a 30% decline in Blackberry shipments. The sluggish PC market has a negative effect on Marvell’s hard-disk drive and controller business. On the good side, the writer believes Marvell has a good cash position, which makes the stock attractive to buyers like value investor David Einhorn, who holds a substantial number of shares.

As the opening of trading neared this morning, Advanced Micro Devices (NYSE: AMD), a chip maker tied to the PC market, splattered some more bad news across the technology sector when it announced plans to reduce its headcount by as much as 30% due to sluggish industry conditions.

Trading in Marvell Technology stock began the new week on a quiet note as share prices started the session virtually where they ended last week at $8.75. The first 90 minutes of the trading day saw the stock touch an intraday high of $8.87. However, trading looked the same as other days when the selling pressure resumed in the afternoon and shares traded at a new 52-week low. The stock finished the day down four cents to close the session at $8.71. Over 10 million shares traded on the day, which fell just shy of the 10.96 million shares exchanged on an average day.

The stock established a 52-week high when shares traded for $16.86 in February. Since Valentine’s Day, traders have shown little love as Marvell share prices have steadily declined by almost 50%.

The average recommendation on Marvell Technology stock given by the 36 research analysts voicing an opinion is “overweight”. The consensus places a price target of $13.07 on the stock.

Marvell Technology Group manufactures fabless semi-conductor products. The company also develops complex systems on chip devices. Marvell’s products are used in data storage, consumer electronics, wireless networking, video imaging processors and host of other applications. The company was founded in 1995 and is located in Hamilton, Bermuda.

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Published by Alan Masterson

Alan has over 25 years of trading experience in the U.S. equity markets. He began his career in finance working on a program trading desk specializing in over-the-counter stocks. His career progressed from that point to his current position as senior trader on an institutional trading desk. In the evenings, Alan teaches economics at a local community college. He has contributed articles to various publications over the last six years, including feature articles for an economics magazine and various financial blogs. You may contact Alan via his email (alanmasterson@wallstreetpr.com) or his Google+ page (https://plus.google.com/103338576216002376250).

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