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conference date: February 26, 2007 @ 1:45 PM Pacific
Time
for quarter ending: January 30, 2007 (4th quarter fiscal 2007)
Forward Looking Statements
Overview: Still no GAAP results because of stock-option review. Completed integration of business segment acquired from Intel. Strong guidance, especially compared to competitors.
Basic data:
Revenues were $622 million, up 20% sequentially from $520.4 million and up 27% year-over-year from $489 million in fiscal Q4 2006.
$596 million in cash. Raised $400 million by issuing debt
Guidance:
Q1 2008: reasonable business conditions expected, which combined with design wins will mean normally seasonally down quarter will see minimal downside. Q1 revenue to $640 to $650 million with gross margins slightly up.
Conference Highlights:
In Q4 business stabilized, as expected, and are now poised for growth much faster than the market.
Sequential increase of 20% largely due to XScale from Intel; $90 to $100 million revenue range expectation was met.
Storage product revenues stabilized. Printer products had solid quarter.
Decline in PC parts demand.
Embedded market had slight increase in revenues. 802.11n demand improved.
Western Digital and Toshiba were 10% plus customers.
Gross margin declined as result of XScale acquisition. Product mix consistent with expectations, manufacturing expenses held down, so gross margin was slightly better than expected.
Inventory increased in Q3. In Q4 reduced inventory, and expect to reach an appropriate level this quarter.
Combined Ferocion and XScale engineering teams. 3 handheld application processors were launched; fastest in industry. Also has a low-power advantage. Also has very advanced voice baseband solutions. 3G approval of processors for Vodaphone. Many wireless design wins. Gigabit solutions continue to be strongly adopted. Introduced first HD video products which has had many design wins. Also expanding storage to service RAID on motherboard.
Q&A:
Any lingering inventory problems? No. 802.11n and storage were problems in 2nd half, but are fine now.
XScale design wins? Very good and have begun to receive samples from outsourced fabrication. Wins on both base band and application processor sides.
Options investigation? Moving towards conclusion and hope to have more information soon.
Storage backlog? Always have a strong backlog and Q1 2008 is no different.
Any standout trends? Printer ASIC business performance has been very good.
Video market? One of a series to be introduced. Starting at very high end, but will move to mid-level and eventually to low end. Some meaningful revenue should be seen second half of year.
Head count? Around 5000.
What % of wifi business was n? Still a small percentage, but was up for the quarter.
Intel accretive by Q4 2008? Yes, off to a better start than expected.
Optical storage business? Moving back to on-track development. Revenue not likely until later on. Is getting design wins; software complexity is tremendous.
HDD high end portables? Does not expect hard drives in cell phones due to changeover to flash technology.
Intel segment margins? Still planning on getting chips from Intel in 2007, but will improve when made in Marvell's foundries, and also from integrating with other products.
WiFi cell phones? Lots of design activity, but low volume so far. We have designs with 4 major suppliers, but don't know when they will ramp.
HBA controllers? Our solutions are small and low-power, yet higher performance. Just building chips, customers build the HBAs.
Long term margin model is 50% target, but won't get there until next year.
Samsung relationship? Still a large customer, just not over 10%, don't read anything into it.
Any interest in desktop box and LCD SOC? We started with HDTV post-processing, where a difference in quality can be seen immediately. Called "quiet video technology." Started on BlueRay, adding other customers who also need the quality.
Intel/XScale confidence? Very confident will more to about $150 million revenue by Q4.
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Disclaimer: Our analyst summaries may include both our condensations of statements made by company representatives and our own analysis. They are not covered by any warranty. We cannot guarantee anything said by company representatives is true. Before making or terminating an investment you should always verify any factual basis of your decision.
Copyright 2007 William P. Meyers