Marvell Technology (MRVL): Restructuring Taking Hold - Needham
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Needham & Company analyst, Quinn Bolton, reiterated his Hold rating on Marvell (NASDAQ: MRVL) following the results of a months-long strategic review of the business by new CEO, Matt Murphy.
Marvell will focus on its strengths in storing, moving and accessing data at high speeds and pursue two initiatives:
1) discontinue specific R&D programs, streamline engineering processes, and consolidate R&D sites to drive increased efficiency, which will result in a reduction of 900 positions worldwide; together with an anticipated meaningful reduction in legal and accounting costs, these actions are expected to reduce annualized NG OPEX by $180-200MM
2) divest certain non-strategic businesses that generated annualized revenue of ~$100MM and NG OPEX of ~$60MM in F1H17.
The restructuring actions in aggregate are expected to reduce annualized NG OPEX to a run rate of $820-840MM by the end of F3Q18 (Oct) from a current annualized run rate of $1,080MM. As a result of these actions, Marvell expects to incur related one-time charges of $90-110MM over the next four quarters, including cash charges of $35-50MM.
Shares of Marvell closed at $12.94 yesterday.
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