Post a CommentMarvell posts $52.8M Q1 net loss as it pays for stock option misdeeds
By Colleen Taylor, Contributing Editor -- Electronic News, 7/10/2007
After months of delays due to the company's recently uncovered history of fraudulent stock options grants, on Monday Marvell Technology Group Ltd. completed and filed with the Securities and Exchange Commission (SEC) its quarterly report on Form 10-Q for the quarter ended April 28, 2007.
The Santa Clara, Calif.-based company reported for its fiscal Q1 sales of $635 million, up from the $521 million in sales the company had for its Q1 2006. But despite its revenue gains, the company recorded a net loss in Q1 of $52.8 million, down significantly from the $77.5 million net profit it made in Q1 2006.
As one of the hardest hit Silicon Valley companies in the government's ongoing crackdown on the practice of stock option backdating in the tech industry, Marvell has recently paid a hefty price, financial and otherwise, in righting its accounting-related wrongs. Last week, Marvell paid $327.4 million in compensation charges when it filed with the SEC a bevy of delayed or restated financial reports that had been held up by its internal stock options history probe completed in May.
Due to that probe's incriminating findings of executive involvement in stock options backdating, Marvell's COO and CFO stepped down from their roles; the company's CEO will remain at his post, but has been advised to step down from his role as chairman of the company's board of directors.
In its filing Monday, Marvell disclosed that it is not out of the woods yet with its stock options-related problems. In addition to an ongoing probe from the United States Attorney for the Northern District of California into the company's stock options accounting history, the SEC has officially launched a formal investigation into the matter for which it has subpoenaed documents from the company. In its filing Monday, Marvell said that it is cooperating with the authorities but that it "cannot predict the outcome" of the investigations.
Despite the company's obvious troubles, Wall Street seems to hold an optimistic view for the value of Marvell's stock following Monday's filing. In a research note sent this morning, investment firm Lehman Brothers said it believes Marvell's stock will "continue to grind higher" now that the company is caught up with its SEC filings. Management turnover that could result from the SEC investigation "is the last potential shoe to drop," the firm said. Lehman has set the price target for $22 per share. Around noon ET today, Marvell's stock was trading at $18.81 per share, up 4.5 percent from its opening price of $18.
