(By Balachander) Marvell Technology Group Ltd. (NASDAQ: MRVL) shares hit a new 52-week low after the semiconductor maker slashed its third-quarter revenue view and said its Chief Financial Officer Clyde Hosein has resigned.
Reacting to Marvell's downbeat guidance and the surprise departure of its finance chief, several Wall Street analysts downgraded their ratings on the stock.
The stock, which has been trading in a 52-week range of $7.55 to $16.86, tumbled 14.33 percent to trade at $7.57 on Friday.
Deutsche Bank analyst Ross Seymore believes the departure of Hosein will be viewed as a negative for the company. Seymore downgraded the stock to "hold" from "buy" and reduced the price target to $9 from $12.
"While the negative preview comes as little surprise, we now expect the weakness to contine in F4Q and believe the CFO change compounds uncertainty at an already difficult time," Seymore wrote in a note. "Given the operating uncertainties, secular challenges in HDDs and limited growth in new markets to date, we view revenue, EPS and share price appreciation potential as limited in the near term."
The Santa Clara, California-based company currently forecasts net revenue between $765 million and $785 million for the third quarter, compared with $800 million to $850 million projected earlier. It also announced that Hosein has resigned as chief financial officer to pursue other opportunities.
"While investors expected a miss, the magnitude will no doubt surprise - almost as much as the immediate departure of CFO Clyde Hosein," wrote Oppenheimer & Co. Inc. Oppenheimer maintained its "perform" rating on the stock.
Mike Burton, an analyst at Brean Capital, said it is not entirely clear why Hosein decided to leave the firm. The company has only mentioned that he 'resigned' 'to pursue other opportunities.' Burton believes that the majority of the 9 percent-plus after-hours decline in the stock is mostly due to the departure. Most investors were aware of the poor PC, and therefore HDD, performance in the 2H of 2012.
Meanwhile, Jefferies downgraded the stock to "hold" from "buy". FBR Capital downgraded the rating to "market perform" from "outperform". Credit Suisse downgraded the stock to "neutral" from "outperform". JPMorgan downgraded the stock to "neutral" from "overweight".
"The continued slowdown in the global economy during the third quarter is resulting in a weaker PC market than previously anticipated and thus lower demand from our storage HDD customers," commented Marvell's CEO Sehat Sutardja. "In addition to the continued weak PC demand patterns, visibility in our other end markets remains low as we head into a seasonally softer fourth quarter."