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Company News

UPDATE 2-Marvell Tech outlook beats, to cut 850 jobs

* Company to cut 850 jobs, 15 pct of workforce

* Q4 EPS ex-items 5 cents beats Wall Street view 1 cent

* Q4 rev $513 mln vs Wall Street view $511 mln

* Q1 forecast ahead of analysts’ expectations

* Shares up 7 pct in after-hours trading (Adds outlook, CFO and analyst comments, background, byline)

By Gabriel Madway

SAN FRANCISCO, March 5 (Reuters) - Marvell Technology Group Ltd's MRVL.O quarterly results and outlook topped Wall Street expectations, boosting its shares 7 percent, and the diversified chipmaker said it would cut 15 percent of its workforce, or 850 jobs.

Marvell, which supplies a wide array of semiconductor components -- including chips for Apple Inc's AAPL.O iPhone and Research in Motion Ltd's RIM.TO BlackBerry -- has been hurt by a steep drop-off in demand, particularly in personal computers.

However, Chief Financial Officer Clyde Hosein said he was optimistic that the company saw the bottom in January.

“It looks like that’s the bottom from a revenue point of view .... The strategy for the company, at least financially, is to now drive improvements in our bottom line,” Hosein told Reuters in an interview.

The job cuts will come from all geographies and areas of the company, Marvell said, but it did not exit any businesses. The company has also imposed a companywide salary freeze, cut some salaries, suspended bonuses and consolidated facilities.

Marvell expects the cost cuts to eventually save it $100 million in operating expenses.

In such an unpredictable economy, Hosein said he is as confident as he could be that the cuts would suffice to get Marvell through tough times. “The successful companies have done it early and deep,” he said.

SALES TUMBLE

Marvell posted a loss in its fiscal fourth quarter ended Jan. 31 of $65 million, or 11 cents share, versus a profit of $1.3 million, or break even per share, in the year-ago period.

Excluding items, the company earned $32.4 million, or 5 cents a share, beating analysts’ average estimate of a penny a share, according to Reuters Estimates.

“Overall a very good performance in this environment,” said ThinkEquity analyst Vijay Rakesh.

Revenue fell 39 percent to $512.9 million, just ahead of analysts’ average estimate of $510.7 million according to Reuters Estimates.

Gross margin was 50.7 percent, up from 48.1 percent last year.

Marvell forecast current-quarter earnings, excluding special items, of 3 to 5 cents a share on revenue of $490 million to $530 million. Wall Street was expecting profit of 0 cents a share on revenue of $471.8 million.

The company is incorporated in Bermuda but has headquarters in Santa Clara, California. Its shares closed down 6 cents at $7.52 on Nasdaq, and rose to $8.05 in extended trading. (Reporting by Gabriel Madway; editing by Richard Chang) (gabriel.madway@thomsonreuters.com; +1 415 677 2536; Reuters Messaging: gabriel.madway.reuters.com@reuters.net)

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