Analyst Conference Summary

conference date: May 28, 2009 @ 1:45 PM Pacific Time
for quarter ending: May 2, 2009 (first quarter fiscal 2010)

Forward-looking statements

Overview: Sequential growth and believes new quarter will also show growth. Cash profitable. But well down from 2008 revenues and profits.

Basic data (GAAP) :

Revenue was $521.4 million, up 2% sequentially from $512.9 million, but down 35% from $804.1 million year-earlier.

Net income was negative $39.5 million, sequentially improving on a net loss of $65 million, but down from positive $69.9 million year-earlier.

EPS (earnings per share) were negative $0.06, up sequentially from negative $0.11, but reversing positive $0.11 year-earlier.

Guidance:

Q2 revenues $540 to $580 million, up about 7% sequentially. 52.2% Non-GAAP gross margin. $225 million in non-GAAP operating expenses, hitting the reduction target 6 months early. $0.07 to $0.13 non-GAAP EPS. Less than $50 million free cash flow due to need to increase inventories. Negative $0.03 to positive $0.03 GAAP EPS.

Conference Highlights:

Numerous design wins should push up revenue in the back half of the year.

Marvell acted quickly to reduce expenses, which resulted in relatively good performance on decreased revenue. Believes the worst of the down turn may be behind them.

Non-GAAP net income was $31.9 million or $0.05 per share, down 79% from year-earlier.

$9 million in restructuring expense. Stock based compensation expense was reduced to $30 and should run $30 to $35 million per quarter for rest of year.

Cash $1.1 billion, up $132 million sequentially. Cash flow from operations $145 million. Free cash flow $132 million.

Accounts receivable was up with DSO up. This was due mainly to revenue bump at end of quarter. Inventories are at the lowest level in 3 years, to 91 days. Will increase inventories in second quarter due to increased orders.

Focus on new product introductions at more advanced process technologies.

Gross margin was 50.6% GAAP, 51.6% non-GAAP.

Q&A:

Are you shipping at end consumption levels at this point? We don't have direct visibility on that. But our own customers are pushing us to reballance their inventories. We are optimistic because of new products being built into new products.

Cellular business break even? Don't give numbers. We will reach profitability, but we had to make a huge investment in the cell phone business, so it may be a couple of years before that happens.

Hard drive product timing? All we can say is new products will go out in calendar 2010.

Any insight into second half of year? We are building inventories because demand started growing in last month of last quarter. We feel very good about the current quarter. We are very cautious about the second half because no one can say if we are out of the economic downturn. Some of this quarter's revenue growth projection is due to new design wins.

Wireless more than 25% growth next quarter. High single digit enterprise networking growth.

What are the new products for Q2? We don't announce new products in storage, but we ship new products regularly. There is constant improvement in SOCs (systems on chips), etc. Same with embedded wireless, with new 55 nm products. A significant part of expenses are due to getting masks to move products to 55 nm process.

In baseband we don't build a separate unit. We supply the communication processors for baseband wireless. Again we are transitioning to 55 nm products. Products range from low cost, high volume to high end, low volume applications. We have added 3D graphics capabilities for some high-end products.

Spot shortages are mostly related to new product ramps.

Backlog? At beginning of quarter it was low to mid $70s, which is higher than the typical $60s. However, one reason for caution is we are going into the summer duldrums. We know we started strong, we don't know how the quarter will end.

Storage chips now represent about 50% of revenue. A few years ago it was nearly 100% of revenue.

Depreciation and Cap Ex for year? Depreciation should be flatish going forward.

Printer business? That tracks our main customer. So it has been down consistent with that. There has been an improvement lately, plus we are getting design wins especially in ink jet printers. So we expect to see higher revenues later this year.

Solid state drive controllers? We are making good progress. We started with high-end, enterprise controllers. We are adding consumer-class controllers this year; they are at the demo stage.

Where does the wireless 25% bump come from? Mostly from new customers or new products from existing customers. Some from current products and customers.

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