May 20, 2010 / 8:41 PM / 8 years ago

UPDATE 2-Marvell sees strong Q2; shares rise

* Q1 adj EPS $0.38 vs est $0.37

* Q1 rev $856 mln vs est $845.3 mln

* Sees Q2 adj EPS $0.38-$0.43

* Shares up 2 pct in extended trade (Recasts; Adds outlook, details, updates share movement)

By Manasi Phadke

BANGALORE, May 20 (Reuters) - Marvell Technology Group Ltd MRVL.O forecast second-quarter results ahead of expectations on the back of revenue from new products and strong mobile, wireless and networking end-markets, sending its shares up 2 percent in extended trade.

Marvell forecast second-quarter earnings of 38 cents to 43 cents a share, excluding items, on revenue of $900 million to $930 million.

Analysts on average were looking for earnings of 36 cents a share, before items, on revenue of $864.4 million, according to Thomson Reuters I/B/E/S.

“In the second quarter, we see the positive trend of new product growth continuing,” Chief Executive Sehat Sutardja said on a conference call with analysts.

The company, whose chips are used in an array of devices from hard drives to smartphones such as Research in Motion Ltd’s RIM.TO BlackBerry, expects revenue from new products to increase to more than 20 percent of its total revenue in the second quarter, from 16 percent in the first quarter.

In the first quarter, about two-thirds of new product revenue came from the strong demand for Marvell’s 3G communication processors and about one-third was from demand for its new wi-fi products, Sutardja said.

Thomas Weisel analyst Kevin Cassidy said Marvell was benefiting from its products in China Mobile Ltd’s 0941.HK OPhone, in which the chipmaker has 8 of the 9 reference designs.

The company expects revenue from its mobile and wireless end-markets to grow more than 25 percent sequentially and revenue from the networking market to show a mid-single-digits increase.

However, the company expects storage, which accounts for about half of its revenue, to be flat to down a few points due to seasonality in the second quarter.

“Everyone knows that hard-disk drive makers are limited on capacity,” analyst Cassidy said, adding that Marvell’s revenue from storage should increase by about 15 percent through the rest of the year.

Marvell’s largest customer is hard-drive maker Western Digital WDC.N. Last month, the company posted its March-quarter results that topped market expectations and predicted solid industry demand for the remainder of the year. [ID:nN23194402]

Marvel has also been aggressively expanding into other areas, including smartphones and electronic readers, with low-cost chipsets for these devices.

For the first quarter ended May 1, the company earned $206 million, or 30 cents a share, compared with a loss of $111 million, or 18 cents a share, a year ago.

Excluding items, Marvell posted earnings of 38 cents a share, slightly above analysts’ expectations of 37 cents a share.

Revenue rose 64 percent to $856 million, while analysts were expecting $845.3 million.

Shares of the company rose 2 percent to $18.12 in after-hours trade. They closed at $17.84 Thursday on Nasdaq.

Reporting by Manasi Phadke in Bangalore; Editing by Maju Samuel, Unnikrishnan Nair

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