Marvell Technology Group Ltd. (NASDAQ: MRVL) stock fell over 3.4% in the pre market session of March 8th, 2019 (Source: Google finance) after the company gave lower than expected guidance for the first quarter of 2020.
In the fourth quarter, the company paid down $75 million of the long-term debt and returned $89 million to shareholders through $50 million in share repurchases and $39 million in dividends. The company exited the quarter with $582 million in cash and short-term investments. The long-term debt was $1.75 billion
MRVL in the fourth quarter of FY 19 has reported the adjusted earnings per share of 25 cents, beating the analysts’ estimates for the adjusted earnings per share of 25 cents. The company had reported the adjusted revenue of $745 million in the fourth quarter of FY 19, beating the analysts’ estimates for revenue of $740.31 million. The core business of storage and networking accounted for 95% of revenue. Networking accounted for 52% of revenue and the storage accounted for 43% of revenue. Other product revenue was $40 million and accounted for 5% of revenue. The non-GAAP gross margin was 64.5%, slightly lower than guidance due to lower than expected revenue in the quarter. Non-GAAP operating expenses were $286 million at the low end of the guidance range provided in December. MRVL tightly managed OpEx in a difficult environment and are committed to doing so in the future. Non-GAAP operating margin was 26%.
Storage revenue for the quarter came in below the expectations at $317 million, declining 22% sequentially. The majority of the shortfall was due to a reduction in demand for the storage controllers. The fiber channel business was slightly lower than expected too but within a normal revenue range for that business.
Marvell expects first-quarter of 2020 adjusted earnings per share to be in the range of 12-16 cents, which comes lower than the 23-cent estimate. The company expects first-quarter sales to be of $650 million (+/- 3 percent), far below the $718.2-million estimate. Further, MRVL expects Non-GAAP gross margin to be approximately 64% and Non-GAAP operating expenses are expected to be $295 million to $300 million.
In fiscal 2020, the company expect an approximate 10% sequential decline in revenue. This projection reflects the residual impact from the tight inventory control, we experienced from the customers in the prior quarter, seasonality and the continued cautious outlook from the China-based customers.