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Marvell to Exit Smartphone Biz

Brian Santo
9/25/2015

Marvell Technology Group announced a "significant restructuring" in its flagging mobile platform business that will include layoffs, a write-down of assets, and apparently an exit from the smartphone market.

The company said it "plans to significantly downsize the mobile platform organization to refocus its technology to emerging opportunities in IoT, automotive, and networking."

Marvell Technology Group Ltd. (Nasdaq: MRVL)'s mobile platform business is part of the company's mobile & wireless sector. Marvell indicated that the wireless operation, which supplies WiFi products, will not be affected by the restructuring.

The mobile platform operation had two major smartphone customers, China Mobile Ltd. (NYSE: CHL) and China Unicom Ltd. (NYSE: CHU). Marvell has never commented on the activity of specific customers, but the mobile & wireless sector experienced four straight quarters of declining revenue, a slide that Marvell partly attributed to the ongoing slowdown in the Chinese economy and reduced demand from customers in China.

The company provided few other details about the restructuring, and said it will not do do until its next quarterly report. The company previously reported Q2 preliminary results that included a $382 million dollar loss on revenue of $711 million.


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Waiting for second-quarter results might be problematic in and of itself. The company is conducting an internal financial audit and has not issued a quarterly report since last May. Marvell previously said that the audit centers on how revenue was reported in its storage device operation.

Marvell said that based on preliminary estimates for the first half of fiscal 2016 (the company was scheduled to have reported the second quarter of its fiscal 2016 earlier this month), its mobile platform generated roughly $122 million in revenues and roughly $13 million in gross profit. It said the successful restructuring of the mobile business is expected to result in annualized operating expense savings in the range of $170 million to $220 million.

Marvell's last quarterly report, for its fiscal 2016 first quarter, was in May. At that point, the mobile platform unit's downslide had already elicited pressure from investors to dump it, one way or another.

During the company's May 21 call with analysts to discuss the company's Q1 2016 results, Marvell Chairman and CEO Sehat Sutardja was asked about exiting the business and responded, "We have to be responsible also for the shareholders' interest, so we'll continue to be open to any strategic opportunities that come in front of us."

— Brian Santo, Senior Editor, Components, T&M, Light Reading

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Kruz
Kruz
9/28/2015 | 10:18:16 AM
Marvell
Is its sad to see that were not even able to secure a buyer for the mobile division..
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