Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of computer-chip maker Marvell Technology Group (NAS: MRVL) plunged 13% today after announcing disappointing guidance and the resignation of its CFO.
So what: Marvell's revenue warning for the third quarter, coupled with the surprise exit of CFO Clyde Hosein, is forcing a whole slew of Wall Street analysts to remove their buy ratings from the stock. While it's no big surprise that demand remains weak amid the slumping global economy, the abrupt departure of Hosein reinforces pessimism over management's strategy to turn things around.
Now what: Management now sees third-quarter revenue in the range of $765 million to $785 million, well below its prior view of $800 million to $850 million, as well as Wall Street's estimate of $910 million. "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," Chairman and CEO Dr. Sehat Sutardja said. "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." Of course, with the stock hitting a new 52-week low today and currently trading at a paltry forward P/E of 7, much of that uncertainty might already be baked into the price.
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The article Why Marvell Shares Got Mauled originally appeared on Fool.com.
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