Why Marvell Technology Group (MRVL) Is Down Today

Update (4:26 p.m. EST): Updated with closing price, day high and low prices, price change and volume information. 

NEW YORK (TheStreet) -- Marvell Technology Group  (MRVL) dropped 1.83% to $15.52, down 29 cents from its previous close of $15.81, at the close of the trading day on Wednesday after the company lost its bid to halve its $1.17 billion patent-infringement verdict awarded to Carnegie Mellon University over computer disk drives.

The stock had a volume of 11,501,156, well above its average of 6,738,080. It hit a high of $15.75 and a low of $15.28 for the day.

Marvell, a mobile phone chipmaker, wanted to cut $620 million from the settlement and argued that that the Carnegie Mellon should not collect damages for the period before it filed the lawsuit because it hesitated to complain. U.S. District Judge Nora Barry Fischer in Pittsburgh rejected this argument.

A federal jury handed out the fourth-largest verdict in U.S. history on Dec. 26, 2012 after it found that Marvell infringed on two Carnegie Mellon patents that would increase the accuracy of data detection from disk drives. The school said Marvell's sales were dropping in the late 1990s and argued that the company needed its inventions to grow its customer base.

Fischer said Carnegie Mellon's five-year delay in filing the suit was "unreasonable and inexcusable," according to Bloomberg, but stated that Marvell was aware of the technology and had to either avoid the technology or establish a licensing deal to use it.

"Marvell's decision to continue production despite this infringement action demonstrates Marvell's apparent acceptance of the business and legal risks," Fischer said.

TheStreet Ratings team rates Marvell Technology 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. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and attractive valuation levels. However, as a counter to these strengths, we find that the company's return on equity has been disappointing."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 9.7%. Since the same quarter one year prior, revenues rose by 19.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • MRVL has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 3.00, which clearly demonstrates the ability to cover short-term cash needs.
  • MARVELL TECHNOLOGY GROUP LTD reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, MARVELL TECHNOLOGY GROUP LTD reported lower earnings of $0.53 versus $0.98 in the prior year. This year, the market expects an improvement in earnings ($0.99 versus $0.53).
  • The gross profit margin for MARVELL TECHNOLOGY GROUP LTD is rather high; currently it is at 52.85%. Regardless of MRVL's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, MRVL's net profit margin of 11.07% is significantly lower than the industry average.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. When compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, MARVELL TECHNOLOGY GROUP LTD's return on equity is below that of both the industry average and the S&P 500.
  • You can view the full analysis from the report here: MRVL Ratings Report