Marvell Technology Group (NASDAQ: MRVL) fell to its lowest level since 2009 today as analysts all over the “Street” downgraded the stock and warned investors away from this chip-producing giant. This fall also occurred less than 24 hours after Chief Financial Officer, Clyde Hosein, suddenly resigned to “pursue other opportunities.” Brad Feller, Vice President and Corporate Controller, will step into this vacated spot in the interim as Marvell looks for his replacement.
No fewer than eight analysts downgraded the stock today, sparking a huge sell-off that saw Marvell finish the day nearly 15% down from Thursday’s closing mark. Thursday’s trading closed at $8.83 before opening today significantly down at $7.94. Shares fell to $7.65 shortly before 11 AM before falling even farther by 1 PM when Marvell saw $7.54. From there, the share price remained fairly steady before seeing its low point of $7.53 at 2:30 PM. The stock recouped a modest amount of its value to close the day at $7.57, down $1.26. This represented a loss of 14.3% with more than 54 million shares changing hands. This was a heavily traded stock given a three-month average volume of just over 11 million shares.
“The continued slowdown in the global economy during the third quarter is resulting in a weaker PC market than previously anticipated and thus lower demand from our storage HDD customer,” said Sehat Sutardja, Marvell’s chairman and CEO, in an early morning statement.
Marvell now expects net revenue for its fiscal third quarter, which closes on October 27, to be between $765 million and $785 million. These numbers are down considerably from its previous estimates that suggested revenue to be closer to $800 million to $850 million. This represents a 5% drop in revenue from the last quarter and over 18% from this time last year.
Perhaps the biggest blow delivered by analysts today came from CLSA, who went as far in its assessment of Marvell to change its recommendation from “Buy” to “Sell.”
Craig Berger, an analyst with FBR Capital Markets, was not much kinder as he spelled out how 45% of Marvell’s revenues are exposed to a slowing, near stagnant, PC market.
“We think Marvell has a structural management problem that inhibits the firm from realizing real change, may discourage the development of formalized engineering processes, and keeps the firm on what seems to be a self-destructive path of no growth and limited traction in cellular,” Berger commented in his written report. He continued, “With the board unwilling to make real changes, business at Marvell could migrate from bad to worse over time.”
A spokesperson from Marvell simply said in its defense, “The analyst is entitled to his opinion,” and, “We think his opinion is wrong.” Investors seemed to think something is wrong as well.
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