Here is my 2 cents worth.
Weakness in the Semi's.
The Sox Index is not only about Chip makers, the Semi Equipment sector (See AMAT, BRKS, LRCX, NVLS etc.) is tanking due to a glut of memory from the memory manufacturers (MU, QI, Samsung).
You also have the perception from some analyst of double booking of orders from INTC (which may or may not be true). I personally do not believe the analysts who are adopting this line of thought. In fact INTC said that they cannot keep up with orders and they have reduced Inventory.
The consumer benefits from cheaper prices for all this competition between SEMI companies, but it is not so good for the bottom line for these companies.
The biggest problem I see facing MRVL is margins (and this is what analyst focus on), this was confirmed by BRCM. The fact is that the chip sector has a lot of competition and prices are reduced to the box and consumer electronics makers (ie, APPL, RIMM, HPQ, DELL etc)so if margins continue to remain weak, then stocks like MRVL will remain weak. This whole sector is viewed as manufacturers of commodity products.
We need to see MRVL get some traction with their new product (eg QDEO) with more design wins before the competition heats up in that area. They also need to reduce expenses and if margins can increase then this is a positive.
I look forward to their next ER and hope to hear that margins are not decreasing. I think they have forecasted revenue for this Q to be north of $710M an increase from last Q, so if expenses can be reduced then the bottom line will look good. The quicker they can move all their PXA manufacturing from INTC to TSM the better, but I think from the last conference call they said this might take a few Q to do.
I posted some evidence that they have increased their orders (the article does not say what specifically) at TSM for this Q, so lets hope they can reduce their expenses and this will be the start of a turn around.
