Marvell Tech misses first-quarter revenue estimates on weak enterprise demand
By Zaheer Kachwala
(Reuters) -Chipmaker Marvell Technology missed Wall Street expectations for first-quarter revenue on Thursday, hurt by weak client spending in its wireless carrier and enterprise markets, sending its shares down around 4% in extended trading.
Marvell's results signal that the company continues to grapple with weaker demand in its consumer markets as well as a cut back on IT spend by its enterprise clients due to signs of a soft economy.
The company reported revenue of $1.16 billion, compared with estimates of $1.17 billion, according to LSEG data.
"We see a favorable setup for the second half of this fiscal year, driven by continued growth in data center and the beginning of a recovery in enterprise networking and carrier infrastructure," Marvell CEO Matt Murphy said.
Excess inventory at its carrier clients and telecom operators have hit the prospects of new orders for firms like Marvell.
The company forecast second-quarter revenue in line with analysts' estimates. It also sees adjusted earnings per share of 29 cents, plus or minus 5 cents, compared with estimates of 30 cents.
"We believe the declines from cyclical businesses have largely run its course, with the worst of the customer inventory digestion in the rear view," said CFRA Research analyst Angelo Zino.
The company's data center segment, which includes its custom chips business, continues to outperform as cloud computing firms shore up spending on hardware used to power artificial intelligence applications.
Data center revenue jumped 87% to $816.4 million, higher than estimates of $772.6 million.
"Marvell is now poised to see a multi-year period of elevated growth, in our view, driven by its robust custom silicon pipeline," Zino added.
Revenue in the enterprise networking segment fell 58% to $153.1 million, while the company's carrier infrastructure unit declined 75% to $71.8 million.
Marvell reported adjusted EPS of 24 cents per share, compared with estimates of 25 cents.
(Reporting by Zaheer Kachwala in Bengaluru; Editing by Maju Samuel)
