Update Marvell Technology Group (MRVL)
After the market closed yesterday (March 4) Marvell Technology Group (MRVL) reported fourth quarter fiscal 2010 earnings of 40 cents a share (excluding items). That was 3 cents a share above the official Wall Street consensus. Revenue climbed 64% from the fourth quarter of fiscal 2009 to $843 million, just a tad above analyst consensus. Strength came in storage (sales up 5%) and networking (sales up 10%).
The best news in the current quarter, however, came on gross margins, which climbed 2.2 percentage points to hit 60%. That’s an all-time high for the chip company and is significantly above the 58.6% gross margin expected by Wall Street.
Normally the first quarter of the company’s fiscal year—the quarter that ends in April—shows a 7% to 10% seasonal decline in sales. In that context Marvell Technology Group’s guidance to Wall Street for a flat to 2% decline in that quarter counts as a sign of major continuing strength for the company. So too does the company’s increase in gross margin targets going forward to 58% to 60%. That indicates that Marvell believes the new margins are sustainable and the savings from its cost reduction program aren’t based on one-time gimmicks.
The conference call wasn’t completely sunshine and buttercups, however.
Update Qualcomm (QCOM)
Qualcomm (QCOM) is doing all it can to support its stock price—but the second half still depends on getting margins higher.
On March 1 the company’s board of directors voted to increase the company’s quarterly dividend by 12% to 19 cents a share from the previous 17 cents a share. The new 76 cents a share annual rate is equal to a 2.03% yield on the noon price on March 2. (The increase is effective for dividends paid after March 28.)
The board also authorized a new $3 billion share buyback program. This replaces the company’s recently expired $2 billion program. (As is typical of most share buyback programs this one wound up buying back fewer shares—about $1.7 billion—than authorized.)
The stock has popped today on the news—up about 5% as of noon—since companies typically use dividend increases to signal their confidence in the company’s future. In this case I think investors are thinking that the company is saying that it believes that its call for a second half 2010 increase in average selling prices—which would bring higher margins—is accurate.
Update Qualcomm (QCOM)
Companies have characters.
If you had a friend like Intel (INTC), for example, you know he’d be up late at night figuring out a way to make the family car run just a bit better than everyone else’s.
If you had a friend like Wal-Mart (WMT), you wouldn’t be surprised to find him out in his backyard on a Saturday building a big shed to hold all the stuff he bought cheap in bulk.
And if you had a friend like Qualcomm (QCOM), he would drive you crazy by never telling you what he was going to do until well after it happened.
I’ve owned Qualcomm off and on over the last decade and I’ve got the scars to prove it. This company just can’t seem to figure out how to tell Wall Street when enthusiasm is running too high and earnings are about to disappoint.
And that’s exactly what happened—again—when the company announced earnings for the first quarter of the 2010 fiscal year after the market close on January 27.
The problem wasn’t what the company said about earnings for the just completed quarter. Qualcomm reported earnings of 62 cents a share, 6 cents a share above Wall Street expectations.
It was the surprisingly dour guidance for the second quarter that did the damage. Second quarter revenue will be just $2.4 billion to $2.6 billion. That’s way below analyst projections of $2.75 billion.
For the entire fiscal 2010 year the company told investors to expect $2.10 to $2.30 a share in earnings (Wall Street had been looking for $2.26) and revenue of $10.4 billion to $11 billion (Wall Street had projected $11.06 billion.)
Where did that come from? The guidance left analysts and investors scratching their heads. How come a company that is clearly beating competitors, gaining market share, and rolling out impressive new products at the rate that Qualcomm is won’t turn in better results for 2010?
Update Nokia (NOK)
The good news in Nokia’s (NOK) January 28 fourth quarter earnings report was that gross profit margin for its cell phones drove the company’s operating margin to 15.4% for the quarter.
Analysts have worried that Nokia’s operating margin was stuck in the current 12% to 14% range indefinitely. Nokia’s operating margin was just 9.8% in 2008 but 15.6% in 2007.
The bad news is that the improvement may not be sustainable.
Update Qualcomm (QCOM)
Talk is just talk. Even, or maybe that’s “especially,” when it’s from a company’s CEO.
But it can still give investors a sense of where a company thinks it’s headed.
Take, for example, the talk from Qualcomm (QCOM) CEO Paul Jacobs in Hong Kong on November 18.
Jacobs told reporters that Qualcomm hopes to sell a fourth-generation chip based on the TD-LTE standard, China’s home growth cell-phone technology in China in 2010.
