Marvell posts a net income loss of $448 million in the first quarter due to the storage market.
Marvell first revolutionized the digital storage industry by moving information at speeds never thought possible. Today, that same breakthrough innovation remains at the heart of the company's storage, processing, networking, security and connectivity solutions. With leading intellectual property and deep system-level knowledge, Marvell's semiconductor solutions continue to transform the enterprise, cloud, automotive, industrial and consumer markets.
Marvell announced financial results for the first quarter fiscal 2020, ended May 4, 2019. The revenue for the first quarter of fiscal 2020 was $662 million, an 11.05 percent decrease for the fourth quarter of fiscal 2019 and a 9.56 percent increase for the first quarter of fiscal 2019. GAAP net loss was $48 million. The loss was lower as compared to a GAAP net loss of $260 million in the previous quarter. However, GAAP net income for the first quarter fiscal 2020 was not as good as the fiscal 2019, because there was a profit of $129 million. Non-GAAP net income was $105 million for the first quarter of fiscal 2020, a decrease of 37.51 for the fourth quarter of fiscal 2019, and a 36.22 percent decrease compared to that for the first quarter of fiscal 2019. For the first quarter of fiscal 2020, GAAP gross margin was 54.6 percent, and non-GAAP gross margin was 64.1 percent.
NAND Flash prices continued to fall, as a result of weak storage market demand. Therefore, the performance of storage business which accounted for almost half of Marvell's revenue has been affected. Specifically, the revenue of storage business was $279 million for the first quarter of fiscal 2020, a decrease of 12.11 for the fourth quarter of fiscal 2019, and a 12.10 percent decrease for the first quarter of fiscal 2019. In terms of networking revenue, there was $341 million, an increase of 39.76 for the fourth quarter of fiscal 2019, and a 11.90 percent decrease for the first quarter of fiscal 2019.
Since CEO Matthew J. Murph took office in 2016, a series of changes have taken place in the strategic layout, for example Marvell has abandoned some consumer businesses, and focused on storage, networking and connectivity bussinesses. On May 6, 2019, Marvell announced that it had reached an agreement to buy the networking specialist firm Aquantia for $452 million. The acquisition would allow Marvell to significantly augment their current networking capabilities, with the company intending to use Aquantia's technology in future PC, enterprise, and especially in-vehicle applications. On May 20, 2019, Marvell released it has entered into definitive agreements to purchase Avera Semi. This acquisition would bring world-class ASIC IP and development capabilities for wired and wireless applications, and leverage significant system-level expertise and design capacity with deep IBM heritage, which extended Marvell’s reach in 5G base stations and included substantial revenue stream. On May 29, 2019, NXP acquired Marvell’s Wi-Fi connectivity business in an all-cash, asset transaction valued at $1.76 billion. This transaction yielded a premium valuation and substantially higher economic return for Marvell shareholders while accelerating our transformation into a leading infrastructure supplier spanning 5G, data center, enterprise and automotive Ethernet applications
Marvell CEO said, “Despite several challenges under the market environment, Marvell will continue to take bold measures to strengthen strategic capital deployment and promote long-term shareholder value. When the first 5G products enters the production phase later this year, Marvell will provide more new wireless infrastructure design.”