The fundamental constructing of Marvell Technology Group Ltd. stands on Tuesday, February 8, 2011 in Santa Clara, California, USA.
David Paul Morris | Bloomberg | Getty Images
Marvell technology First-quarter results forecast Thursday were below market expectations and hurt by weak demand for its custom chips for artificial intelligence applications, sending the corporate’s shares down about 8% in prolonged trading.
The company had indicated in November that it expected first-quarter revenue to fall by about half, weighed down by weak demand in its mobile and enterprise markets.
“While we forecast weak near-term demand impacting consumer, carrier infrastructure and enterprise networks, we expect revenue declines in these end markets to be behind us after the first quarter,” said Matt Murphy, CEO by Marvell, on Thursday.
Customers including cloud service providers and telecom operators have been working to cut back their excess chip inventories after quickly stocking up through the pandemic to avoid supply shortages.
These inventory corrections are affecting Marvell’s prospects for brand new orders.
The company forecast first-quarter adjusted earnings per share of 23 cents, plus or minus 5 cents, compared with estimates of 40 cents per share, based on LSEG data.
Marvell, which also announced a $3 billion stock repurchase authorization, said it expects first-quarter net sales of $1.15 billion, up or down 5%, compared with estimates of 1.37 billion US dollars.
The company reported fourth-quarter revenue of $1.43 billion, beating estimates of $1.42 billion, driven by rapid adoption of artificial intelligence.
Revenue in the corporate’s data center segment, which incorporates its custom AI chips and networking equipment business, rose 54% to $765.3 million, compared with estimates of $759.8 million.
