Chipmaker Marvell Technology Group Ltd delivered higher-than-expected earnings and revenue for the third quarter and forecast strong results in the current quarter, boosted by robust demand for its networking and connectivity chips.
Shares of Hamilton, Bermuda-headquartered Marvell, which have risen nearly 68 percent since the beginning of the year, gained another 2.7 percent in after-market trading on Tuesday.
Marvell Chief Executive Matthew Murphy, who took the top job about a year ago, has sharpened the company’s focus on networking and WiFi connectivity products to counteract falling demand for chips used in hard disk drives of personal computers.
Marvell said last week it would buy smaller rival Cavium Inc for about $6 billion, seeking to expand its wireless connectivity chip business.
Under Murphy, Marvell has also undertaken restructuring programs to cut costs and hive off non-core businesses.
“What makes (Marvell) management confident is with the restructuring largely now behind the company, Marvell is starting to hit on all cylinders,” said Betsy Van Hees, an analyst at Loop Capital Markets.
Revenue in Marvell’s computer networking and WiFi connectivity chip businesses rose in the third quarter ended Oct. 28, offseting a fall in revenue from its main data storage chip unit.
The data storage business – which makes chips used for reading and writing data on hard-disk and flash drives – generated $315.3 million in revenue, down 4 percent from a year ago.
“In the near-term, we believe Marvell’s top-line performance will continue to underperform its peer semiconductor group as its storage business will continue see secular decline in the hard-disk drive segment, offset by growth in solid-state drives,” said Summit Redstone analyst Kinngai Chan.
Marvell forecast adjusted earnings of 29 to 33 cents per share and revenue of between $595 million and $625 million for the quarter ending January 2018.
Analysts on average were expecting earnings of 27 cents per share and revenue of $590.2 million, according to Reuters.
The company said net income from continuing operations rose to $149.4 million or 30 cents per share in the third quarter, from $83.2 million or 16 cents per share a year ago. Excluding items, Marvell earned 34 cents per share.
Revenue dipped 1.2 percent to $616.3 million.
Analysts had expected third-quarter earnings of 33 cents per share and revenue of $613.6 million.