UPDATE 2-Marvell foresees solid Q2 but shares fall

* Q1 non-GAAP EPS matches Street view 5 cents

* Shares down 3.4 percent

* Sees Q2 revenue of $540 mln to $580 mln

* Sees Q2 non-GAAP EPS of 7 cents to 13 cents (Adds CEO, CFO and analyst comment)

By Clare Baldwin

SAN FRANCISCO, May 28 (Reuters) - Marvell Technology Group Ltd (MRVL.O) gave a strong fiscal second-quarter forecast on the back of stronger orders and cost cuts, but its shares slid on Thursday after a months-long rally.

Shares in the microchip designer fell 5 percent in early after-hours trade with some investors having held out hope for a stronger first quarter performance as the chip sector recovered. But the shares recovered some of their losses and were down 3.4 percent after the executives gave the second quarter forecast during the conference call.

The company forecast second quarter revenue of between $540 million and $580 million and said non-GAAP earnings per share would be between 7 cents and 13 cents.

That prediction exceeded revenue estimates for $531.58 million and a 7 cent profit on a non-GAAP basis, according to Reuters Estimates.

In its first fiscal quarter ended May 2, the company earned $31.9 million, or 5 cents a share, excluding certain items, versus $150.4 million or 24 cents a share in the same period last year. The most recent period matched an average analyst forecast for a 5 cent per share profit, according to Reuters Estimates.

Revenue dropped 35 percent to $521.4 million from $804.08 million, compared with the $517.06 million analysts had expected on average.

"People were previewing anywhere from $530 to $540 million for revenue in the April quarter. That's why, when revenue came in at $520 million, although it was better than guidance, it was below the whisper expectations," said Barclays Capital analyst Romit Shah.

"The shares are creeping up again because they offered a very solid outlook for the July quarter."

Executives were upbeat on the current quarter. The industry had overreacted to the downturn, Chief Financial Officer Clyde Hosein said, and a correction against that was now being paired with a back-to-school build-up of momentum.

But he warned investors not to get too "exuberant" until they saw what happens during the holiday season.

In March, Hosein said revenue had hit bottom in January. But Chief Executive Sehat Sutardja told the Reuters Global Technology Summit last week it was hard to tell if technology demand was recovering, as opposed to temporary moves to replenish inventory. [ID:nN18368051]