Marvell said it will reduce the headcount of its mobile platform organization by about 17% as part of the restructuring. The layoffs are expected to save the company between $170 million and $200 million annually.
The restructuring will begin immediately, with "major activities" expected to take place through the end of fiscal 2016, which ends in January 2016. The company expects to incur total charges of about $100 million to $130 million as part of the restructuring.
The company's mobile platform organization generated about $122 million in revenue and about $13 million in gross profit in the first half of fiscal 2016.
Marvell said the downsizing of the mobile platform organization will allow it to "refocus its technology to emerging opportunities in IoT, automotive, and networking."
TheStreet Ratings team rates MARVELL TECHNOLOGY GROUP LTD as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate MARVELL TECHNOLOGY GROUP LTD (MRVL) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. At the same time, however, we also find weaknesses including deteriorating net income, a generally disappointing performance in the stock itself and feeble growth in the company's earnings per share."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- MRVL, with its decline in revenue, underperformed when compared the industry average of 11.5%. Since the same quarter one year prior, revenues fell by 26.0%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- MARVELL TECHNOLOGY GROUP LTD has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, MARVELL TECHNOLOGY GROUP LTD increased its bottom line by earning $0.84 versus $0.64 in the prior year. For the next year, the market is expecting a contraction of 35.7% in earnings ($0.54 versus $0.84).
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 35.75%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 374.07% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Semiconductors & Semiconductor Equipment industry. The net income has significantly decreased by 375.4% when compared to the same quarter one year ago, falling from $138.87 million to -$382.43 million.
- You can view the full analysis from the report here: MRVL