Monday, April 18, 2011

Marvell (MRVL) Rating Cut to Hold by Susquehanna

Shares of Marvell (NASDAQ:MRVL) are getting crunched today, as Susquehanna lowered its rating on the company from "Positive" to "Neutral."

Even though Marvell Technology Group is cheap at this time, it is balance by the risk shifts from its top customer Research in Motion (NASDAQ:RIMM) and the hard-disk market.

According to Susquehanna Financial chip analyst Christopher Caso, Marvell's most recent projection for the April quarter was made before the earthquake in Japan, which means it will be skewed because of the now anticipated weak quarter for disk drives.

Caso said with Western Digital (NYSE:WDC) accounting for about 21 percent of Marvell’s annual revenue, it “is likely to be affected by [Texas Instruments's (TXN)] motor controller shortage.”

Also noted was while Seagate Technology (NASDAQ:STX) will be adding some parts from Marvell in the quarter, that will be offset by the loss of some socket business from Seagate.

With RIM generating 14 percent of revenue at Marvell, it isn't too bright there either, even though the company will have “at least three new phones ramping at RIM."

Some of that negativity comes from assumptions that eventually RIM will use "QNX" operating systems, which will more than likely utilize Qualcomm (NASDAQ:QCOM) chips, not Marvell's.

Marvell was trading at $15.13, falling $0.84, or 5.26 percent, as of 2:19 PM EDT.

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