Tech stock under pressure: Marvell Technology Group Ltd. (NASDAQ: MRVL)

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Marvell Technology Group Ltd. (NASDAQ: MRVL) stock fell over 1.8% on 4th December, 2019 (as of 9:32 am GMT-5; Source: Google finance) after the company in the third quarter of FY 20 has reported a flat growth with Revenue of $662 million compared to the guidance of $660 million at mid-point. Networking formed 50% of the revenue in the third quarter with storage contributing 43%. The company posted the non-GAAP gross profit of $421 million or 63.5% of revenue at the midpoint of the guidance range. Non-GAAP operating profit was $138 million or 21% of revenue for the quarter.

Moreover, in the third quarter, the company had returned $40 million to shareholders through dividend and then it had exited the quarter with $438 million in cash and cash equivalent.

For the fourth quarter of fiscal 2020, the company expects revenue to be $750 million +/- 3%, Non-GAAP gross margin is expected to be approximately 62%, Non-GAAP operating expenses are expected to be $315 million to $320 million and Non-GAAP diluted income per share is expected to be in the range of $0.15 to $0.19 per share. The fourth quarter guidance includes expected results from the Aquantia and Avera acquisitions for the full quarter and also the expected results for the full quarter from the Wi-Fi Connectivity Business.

On the other hand, MRVL had completed the acquisition of Aquantia Corp. on September 19, 2019, approximately 6 weeks before the end of the third quarter of fiscal 2020. After the third quarter end, Marvell has completed the acquisition of Avera Semiconductor, which is the Application Specific Integrated Circuit business of GlobalFoundries.

Meanwhile, the third quarter was just the start of the 5G ramp for the company as it was driven mainly by a single region. The company expects the initial deployments in Korea to continue to be the main driver for the 5G revenue for coming quarters and the company expects to see the benefit from other geographies later in fiscal 2021. Further, the company expects to commence production of baseband processors for the second Tier 1 base station customer in the fourth quarter of fiscal 2021, which will further be adding to the overall 5G revenue ramp. The broadening adoption of the 5G platform is a testament to the advanced capabilities of the multi-core embedded processor portfolio further complemented by the Ethernet switch and PHY products and the company now have added Avera’s full custom ASIC capabilities, enabling the company to offer an industry-leading 5G suite of technology.

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