Marvell Stock Slides On Softer Sales Forecast After Cloud Demand Drives Q2 Profit Beat

Marvell Technology  (MRVL)  shares moved lower in pre-market trading after the chipmaker posted modestly firmer-than-expected second quarter earnings but cautioned that supply chain disruptions would continue to pressure near-term sales.

Marvel said current quarter revenues would likely hit $1.56 billion, with gross margins in the region of 51.1%, and non-GAAP profits of around 59 cents per share, with the muted figures linked to what CEO Matt Murphy said were supply chain challenges that would “impact our ability to fully meet the demand on a sequential basis.”

For the three months endings in July, Marvel posted adjusted earnings of 57 cents per share, topping Street forecasts by a penny, on record revenues of $1.52 billion, up 41% from last year, as demand for its 5G and cloud-focused chips offset weakness in some consumer markets.

Murphy, in fact, said cloud data center demand remains healthy and its the “single biggest long-term growth driver” for Marvell’s business. 

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“We expect our revenue mix by end market will continue to be influenced more by supply than demand in the near term,” CEO Murphy told investors on a conference call late Thursday. “As we continue to secure capacity to support our long-term growth, we are encouraged to see some pockets of additional supply starting to open up on certain nodes and simple package technologies.”

“For our high complexity products with long manufacturing cycle times, such as in our data center end market, the supply chain for leading-edge technology and advanced packaging remains very tight,” he added.

Marvell shares were marked 3.4% lower in pre-market trading to indicate an opening bell price of $53.20 each, a move that would extend the stock’s six-month decline to around 19.4%.

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