Saturday, May 23, 2015

Seeking Alpha: Unable To Find A Foothold, Marvell Keeps Sliding

One of the things I notice in the bullish arguments for Marvell (NASDAQ:MRVL) is that there's a lot of talk about the company's "strong IP" and the likelihood that an appeals court will overturn a $1 billion-plus patent judgment against the company. The trouble with that is that Marvell hasn't given anybody particularly strong reasons lately to believe that they can translate IP into sustainable market share and the patent judgment reversal (if that indeed happens) is a one-time event.

As is, it's hard to find a strong argument to buy and hold Marvell for its turnaround qualities. The storage business seems to be incapable of supporting sustained growth, and I think the company's Quixotic quest to remain a player in mobile is bleeding away value. Last and not least, I see no particular signs that networking chip companies like Broadcom (NASDAQ:BRCM) and Cavium (NASDAQ:CAVM) are, or should be, worried about Marvell's efforts in this market.

I do believe that ditching the mobile business could add $1.50/share in value relatively quickly and a substantial reduction in the patent award could add another $2/share. Those two events would be worth around a 20% return, but neither are certain. What's more, absent a better vision from management regarding what Marvell does (and does not) actually do well, it's hard to regard this as more than a trading candidate.

Read more here:
Unable To Find A Foothold, Marvell Keeps Sliding

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