Marvell: Fiscal 4Q11 Financial Results

Marvell Technology Group Ltd. reported financial results for the fourth fiscal quarter and fiscal year 2011, ended January 29, 2011.

Revenue for the fourth quarter of fiscal 2011 was $901 million, a 7 percent increase from $843 million in the fourth quarter of fiscal 2010, ended January 30, 2010, and a 6 percent sequential decrease from $959 million in the third quarter of fiscal 2011, ended October 30, 2010.

For the fiscal year ended January 29, 2011, revenue was $3.61 billion, an increase of 29 percent over revenue of $2.81 billion for the fiscal year ended January 30, 2010.

GAAP net income for the fourth quarter of fiscal 2011 was $223 million, or $0.33 per share (diluted), compared with GAAP net income of $205 million, or $0.31 per share (diluted) for the fourth quarter of fiscal 2010. GAAP net income in the third quarter of fiscal 2011 was $256 million, or $0.38 per share (diluted).

For the year ended January 29, 2011, GAAP net income was $904 million, or $1.34 per share (diluted), compared with GAAP net income of $353 million, or $0.54 per share (diluted), for the year ended January 30, 2010.

Non-GAAP net income for the fourth quarter of fiscal 2011 increased to $273 million, or $0.40 per share (diluted), as compared with non-GAAP net income of $266 million, or $0.40 per share (diluted) for the fourth quarter of fiscal 2010.  Non-GAAP net income for the third quarter of fiscal 2011 was $307 million, or $0.45 per share (diluted).

For the fiscal year ended January 29, 2011, non-GAAP net income was $1.11 billion, or $1.64 per share (diluted), as compared with non-GAAP net income of $648 million, or $0.99 per share (diluted) for the fiscal year ended January 30, 2010.

"We had a strong fiscal year for 2011 with revenues up 29% from the previous year, and free cash flow of nearly $1.1 billion or $1.60 per share. This is amongst the best in our industry and the highest free cash flow generation in the history of Marvell," said Dr. Sehat Sutardja, Marvell’s Chairman and Chief Executive Officer. "While the results for our fourth quarter continue to be affected by seasonal declines in our mobile and wireless end markets, we are well positioned with competitive products to take advantage of the trends in the coming years."

Marvell reports net income, basic and diluted net income per share in accordance with U.S. generally accepted accounting principles (GAAP) and on a non-GAAP basis as outlined below. Reconciliations of GAAP net income to non-GAAP net income for the three months ended January 29, 2011, October 30, 2010 and January 30, 2010 and fiscal years ended January 29, 2011 and January 30, 2010, respectively, appear in the financial statements below. Non-GAAP net income, where applicable, excludes the effect of stock-based compensation, amortization and write-offs of acquired intangible assets, restructuring costs, and certain one-time expenses or benefits.

GAAP gross margin for the fourth quarter of fiscal 2011 was 58.7 percent, compared to 59.7 percent for the fourth quarter of fiscal 2010 and 59.3 percent for the third quarter of fiscal 2011. GAAP gross margin for fiscal 2011 was 59.2 percent compared to 56.3 percent for fiscal 2010.

Non-GAAP gross margin for the fourth quarter of fiscal 2011 was 59.4 percent, compared to 60.0 percent for the fourth quarter of fiscal 2010 and 59.5 percent for the third quarter of fiscal 2011. Non-GAAP gross margin for fiscal 2011 was 59.7 percent compared to 56.7 percent for fiscal 2010.

Shares used to compute GAAP net income per diluted share for the fourth quarter of fiscal 2011 were 679 million shares, compared with 669 million shares in the fourth quarter of fiscal 2010 and 675 million shares in the third quarter of fiscal 2011. Shares used to compute non-GAAP net income per diluted share for the fourth quarter of fiscal 2011 were 685 million shares, compared with 672 million shares for the fourth quarter of fiscal 2010 and 677 million shares for the third quarter of fiscal 2011.

Shares used to compute GAAP net income per diluted share for the fiscal year ended January 29, 2011 were 677 million shares as compared with 654 million shares used to compute GAAP net income per diluted share for the fiscal year ended January 30, 2010. Shares used to compute non-GAAP net income per diluted share for the fiscal year ended January 29, 2011 were 681 million shares as compared with 657 million shares for the fiscal year ended January 30, 2010.

Cash flow from operations for the fourth quarter of fiscal 2011 was $251 million, compared to the $281 million in the fourth quarter of fiscal 2010 and the $368 million reported in the third quarter of fiscal 2011. Cash flow from operations for fiscal 2011 was $1.19 billion as compared to $812 million for fiscal 2010.  Free cash flow for the fourth quarter of fiscal 2011 was $213 million, down from the $253 million in the fourth quarter of fiscal 2010 and down from the $338 million reported in the third quarter of fiscal 2011. Free cash flow for fiscal 2011 was $1.08 billion as compared to $756 million in fiscal 2010. Free cash flow as presented above is defined as cash flow from operations, less capital expenditures and purchases of IP licenses.

Share Repurchase Program
Marvell also announced that its Board of Directors has authorized the Company to repurchase up to an additional $500 million, for a total of $1 billion, of its outstanding common shares.

Marvell intends to effect the repurchase program in accordance with the conditions of Rule 10b-18 under the Securities Exchange Act of 1934, as amended. The repurchase program will be subject to market conditions and other factors and does not obligate Marvell to repurchase any dollar amount or number of its common shares. The program may be extended, modified, suspended or discontinued at any time.  The repurchases, which are expected to be funded from Marvell’s current cash and short-term investments position of over $2.9 billion, may occur in open market, privately negotiated or block transactions. As of February 28, 2011, Marvell has purchased approximately $150 million under the existing repurchase authorization bringing the total available under the repurchase program up to approximately $850 million.

To read the earnings call transcript