Marvell: Fiscal 4Q13 Financial Results

Marvell Technology Group Ltd. reported financial results for the fourth fiscal quarter and fiscal year 2013, ended February 2, 2013.

Fourth Quarter of Fiscal 2013
and Fiscal Year 2013 Financial Highlights

• Revenue: Q4 FY 2013 $775 Million; FY 2013, $3.17 Billion
• GAAP Net Income: Q4 FY 2013, $50 Million; FY 2013, $307 Million
• GAAP EPS: Q4 FY 2013, $0.09; FY 2013, $0.54
• Non-GAAP Net Income: Q4 FY 2013, $104 Million; FY 2013, $498 Million
• Non-GAAP EPS: Q4 FY 2013, $0.19; FY 2013, $0.86
• Free Cash Flow: Q4 FY 2013, $161 Million, FY 2013, $626 Million

First Quarter of Fiscal 2014 Financial Outlook
Revenue to be in the range of $700 to $740 Million

• GAAP Gross Margin to be in the range of 52.7% 50 bps. Non-GAAP Gross Margin to be in the range of 53.0% 50 bps.
• GAAP Operating Expenses to be in the range of $360 Million $10 Million. Non-GAAP Operating Expenses to be in the range of $310 Million $10 Million.
• GAAP EPS to be in the range of $0.04 $0.02. Non-GAAP EPS to be in the range of $0.14 $0.02.

Fourth Quarter of Fiscal 2013 and Fiscal Year 2013 Summary
Revenue for the fourth quarter of fiscal 2013 was $775 million, a 1% sequential decrease from $781 million in the third quarter of fiscal 2013, ended October 27, 2012, and a 4% increase from revenue of $743 million in the fourth quarter of fiscal 2012, ended January 28, 2012.

For the fiscal year ended February 2, 2013, revenue was $3.17 billion, a decrease of 7% from revenue of $3.39 billion for the fiscal year ended January 28, 2012.

GAAP net income for the fourth quarter of fiscal 2013 was $50 million, or $0.09 per share (diluted), compared with GAAP net income of $69 million, or $0.12 per share (diluted), for the third quarter of fiscal 2013, and $81 million, or $0.13 per share (diluted), for the fourth quarter of fiscal 2012.

For the year ended February 2, 2013, GAAP net income was $307 million, or $0.54 per share (diluted), compared with GAAP net income of $615 million, or $0.99 per share (diluted), for the year ended January 28, 2012.

Non-GAAP net income was $104 million, or $0.19 per share (diluted), for the fourth quarter of fiscal 2013, compared with non-GAAP net income of $113 million, or $0.20 per share (diluted), for the third quarter of fiscal 2013 and $127 million, or $0.21 per share (diluted), for the fourth quarter of fiscal 2012.

For the fiscal year ended February 2, 2013, non-GAAP net income was $498 million, or $0.86 per share (diluted), compared with non-GAAP net income of $795 million, or $1.27 per share (diluted) for the fiscal year ended January 28, 2012.

"Fiscal year 2013 was a disappointing year for Marvell. Industry hard disk drive unit shipments declined for the year offsetting share gains, the networking end market was relatively flat and we endured a product transition in Mobile. Despite the revenue decline, Marvell remained profitable and generated $626 million in free cash flow while simultaneously continuing investments in several key initiatives," said Dr. Sehat Sutardja, Marvell’s chairman and CEO. "We expect many of our investments and key initiatives to produce tangible results in the new fiscal year across all of our served end markets. These include continued share gains in HDDs, strong growth and share gains in SSDs and hybrids, above market growth in networking, increased traction for our connectivity products and a resumption of growth in our mobile business."

GAAP gross margin for the fourth quarter of fiscal 2013 was 52.2%, compared to 52.0% for the third quarter of fiscal 2013 and 54.1% for the fourth quarter of fiscal 2012. GAAP gross margin for fiscal year 2013 was 52.9% compared to 56.8% for fiscal year 2012.

Non-GAAP gross margin for the fourth quarter of fiscal 2013 was 53.2%, compared to 52.3% for the third quarter of fiscal 2013 and 54.5% for the fourth quarter of fiscal 2012. Non-GAAP gross margin for fiscal year 2013 was 53.4% compared to 57.0% for fiscal year 2012.

Shares used to compute GAAP net income per diluted share for the fourth quarter of fiscal 2013 were 528 million shares, compared with 559 million shares in the third quarter of fiscal 2013 and 599 million shares in the fourth quarter of fiscal 2012. Shares used to compute GAAP net income per diluted share for fiscal year 2013 were 563 million shares as compared with 623 million shares for fiscal year 2012.

Shares used to compute non-GAAP net income per diluted share for the fourth quarter of fiscal 2013 were 544 million shares, compared with 578 million shares for the third quarter of fiscal 2013 and 606 million shares for the fourth quarter of fiscal 2012. Shares used to compute non-GAAP net income per diluted share for fiscal year 2013 were 579 million shares as compared with 627 million shares for fiscal year 2012. The decrease in shares used to compute both Marvell’s GAAP and non-GAAP net income per diluted share was primarily due to Marvell’s share repurchase program.

Cash flow from operations for the fourth quarter of fiscal 2013 was $205 million, compared to the $137 million reported in the third quarter of fiscal 2013 and the $69 million reported in the fourth quarter of fiscal 2012. Free cash flow for the fourth quarter of fiscal 2013 was $161 million, compared to the $113 million reported in the third quarter of fiscal 2013 and the $38 million reported in the fourth quarter of fiscal 2012. Free cash flow as presented above is defined as cash flow from operations, less capital expenditures and purchases of IP licenses.

Under the share repurchase program, Marvell repurchased approximately 34 million shares for a total of $283 million in the fourth quarter of fiscal 2013. Over the past ten quarters, Marvell has repurchased and retired approximately 184 million shares, or about 27%, of its outstanding shares.

Marvell also paid a quarterly dividend of $0.06 per share on December 21, 2012 to all shareholders of record as of December 13, 2012. Marvell intends to pay its next quarterly dividend of $0.06 per share on April 4, 2013 to all shareholders of record as of March 14, 2013.