Happy Hannukkah? Not if You Work at Marvell(MRVL)
Written by: Aaron Katsman | November 28, 2007
Aaron Katsman
www.IsraelNewsletter.com
With today’s news that Marvell Technology(MRVL) is planning to fire 100 Israeli workers, as part of a global cost-cutting plan, it appears that this hi tech firm is going to be the Grinch that steals Hanukkah.
Marvell designs chips used in hard-disk drives, mobile phones, Wi-Fi functional electronics and Internet networking gear. The company has been embroiled in its own options backdating scandal, and has been focused on getting its financial house in order.
Marvellposted a loss of $6.4 million, or a penny a share, on revenue of $758.2 million for the third quarter ended Oct. 27. During the same period a year ago, the chip-maker earned $6 million, or a penny a share, on revenue of $520.4 million.
Notable Calls has an interesting analysis of where they think the stock is going. I think that at these levels, $15 a share, the share makes for an interesting contrarian investment. Marvell is taking steps to improve their margins, and along with the cost-cutting, they appear to be in the process of getting their ship in order. No question it has taken more time the many investors would have hoped for but, while these numbers weren’t of the blowout variety, they weren’t terrible. Keep in mind the relationship with Apple(AAPL). Marvell is currently supplying the Wi-Fi- chip in the iPhone, and many analysts are predicting that it will grow the Apple relationship, especially for the next-generation video iPod player.
This may make for a great turnaround.
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Disclosure: Author has a position in MRVL. He holds no position in any other stock mentioned, as of 11/28/07.
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Aaron Katsman is the lead portfolio manager for the Israel Growth Portfolio and Managing Director of America Israel Investment Associates, LLC. For more information, go to www.israelnewsletter.com or call 1-888-327-6179, or email aaron@profile-financial.com.
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