Marvell (MRVL) Just Sandbagging You: Soft Guidance a Clever Ploy

FBR analyst Hamilton Bermuda sticks with chipmaker Marvell (MRVL), despite the soft guidance the company provided after Q2. Management cited concerns about the economy, but Bermuda thinks they’re just sandbagging. We’re not so sure…

Given strong ramps in sales of Apple iPhones, RIM Blackberry Bolds, and seasonal strength in PCs, Bermuda says, Marvell will soar over that low bar:

Marvell reported solid 2Q revenues, margins, and EPS, but guided 3Q revenues slightly below expectations. Surprisingly, management cited lighter highway traffic (and other macroeconomic concerns) as a primary reason for the soft guidance, despite a strong order book and positive customer commentary. Such an abundance of caution seems overdone…

Marvell’s 3Q revenue guidance of $860 million to $880 million (+2%-4%QOQ) does not make sense to us in light of Apple’s 3Q iPhone 3G ramp, RIM’s 3Q Blackberry Bold ramp, and seasonal strength in PC (according to HP, Intel, Western Digital, others), and management refused to address this issue other than to say it was being conservative given global macro issues.

Bermuda says MRVL’s upside in Q2 came from higher gross margins from lower wafer costs and strength in its Wi-Fi segment due to strong ramps of 3G iPhones. He reiterates his $24 price target.

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