Marvell Technology Inc (MRVL)

[Lakers_w]

MRVL smartphone pipeline has never been stronger
RIMM Sneezes, Marvell Catches A Cold
Posted by Eric Savitz
September 26, 2008, 1:38 pm

Marvell (MRVL) shares are suffering some collateral damage from last night’s Research In Motion (RIMM) earnings call. RIMM is a key customer for Marvell, accounting for 7%-9% of its revenues, according to Craig Berger, chip analyst at Friedman Billings Ramsey. Berger remains bullish on Marvell shares, but he noted this morning that there were a couple of issues that came up on the call that posed dangers for the stock.

The company said launch of the BlackBerry Bold and other new products was being delayed until Q4; he says this is “incrementally negative” since it pushes out shipment of some 3G chips to RIMM.

Management mentioned that it plans component supplier diversification, which Berger notes has “heightened Marvell share loss concerns.”
MRVL today is down 97 cents, or 9%, to $9.79.

[With BB Bold, Storm using Tavor, Bulverde Flip phone 8220 launched in U.S. in Oct'08, four new Samsung, three new ASUS smartphones launched in Oct'08, MRVL Q4 will be very strong. Mkt already knew that 8900 Javlin used Freescale. The St. always looks forward, not backward. MRVL smartphone pipeline has never been stronger.]

UPDATE 2-Analysts voice concerns about falling margins at RIM
Fri Sep 26, 2008 4:12pm BST
http://uk.reuters.com/article/technology-media-telco-SP/idUKBNG36387320080926

Sept 26 (Reuters) - Several analysts tempered their views on Research In Motion (RIMM.O: Quote, Profile, Research) (RIM.TO: Quote, Profile, Research) on concerns of declining gross margins, but said they were bullish on the BlackBerry maker's product pipeline. On Thursday, the company warned that current-quarter profit will lag estimates as it spends more money developing a new crop of BlackBerry smartphones and forecast weaker-than-expected gross margin.

"We are disappointed that the weakness originates not in a temporary setback owing to a product transition but in a permanent step-down in gross margins," J.P. Morgan Securities analyst Paul Coster wrote in a note to clients.

Shares of the company lost more than a quarter of their value both on Nasdaq and the Toronto Stock Exchange.

Coster maintained an "overweight" rating on the stock, saying the pullback is an excellent entry point into a tremendous growth stock, and a massive new product cycle seems certain to win the company significant market share heading into 2009.

Morgan Keegan maintained its "outperform" rating on the stock of the company, saying it expects the shares to appreciate markedly from current levels when operating leverage returns.

Smartphones are expected to grow three times faster than the overall handset market, said Raymond James, which upgraded the stock to "outperform" from "market perform."

The brokerage, however, cut its price target on the stock to $110 from $140 to reflect its lower earnings estimates for the company.

RBC Capital Markets downgraded the stock to "sector perform" from "outperform," citing reduced visibility to recovering margins and increased risks to growth from the macroeconomic environment. It lowered its price target to $90 from $165.

Genuity Capital Markets, which kept its "buy" rating on the stock, said the company will be able to drive higher earnings as volumes ramp up and operating expenses decline as a percent of sales. It cut its price target to $140 from $183.

http://www.reuters.com/article/marketsNews/idUSN2553005820080926?pageNumber=2&virtualBrandChannel=10272

Analysts and investors have long held concerns that some of RIM's large corporate clients could scale back BlackBerry purchases and upgrades as the economic downturn takes hold, hurting the company's performance. The recent turbulence on Wall Street has underscored those concerns.

Balsillie has said that he sees a limited impact at most because the U.S. financial-services industry, which has been rocked by the downturn, makes up only a small part of RIM's subscriber base.

On Thursday, he said corporate clients were still buying BlackBerrys and that the enterprise business "remains strong."

The company said it added 2.6 million subscribers and that its total base is now about 19 million.