Thanks to its aggressive acquisition strategy, Marvell Technology Group is getting a lot more scrutiny these days, and that’s not necessarily a good thing for this previously obscure firm.
The fabless semiconductor company may be one of the biggest chip vendors that you’ve never heard of. It posted sales of $1.67B in fiscal 2006. With the billion-dollar buying binge Marvell has been on for the past year, fiscal 2007 should see the company comfortably ensconced in the Multi-Gigabuck Club for chip makers. (I wish I could say I was not only a member of that club, but the president – alas.)
To review briefly: Marvell just wrapped up its $600M purchase of Intel’s processor line for mobile devices. Intel had the option of being paid with $500M in cash and $100M in Marvell’s stock; in the end, the world’s biggest chip maker said “I’ll take it all in Benjamins, please.” Marvell previously acquired the printer chip business of Avago Technologies for $240M and the drive controller chip business of QLogic for $228M, among other, smaller deals.
Marvell has built a small empire of semiconductors that can be found in those darn BlackBerrys, Xbox 360 game consoles, Cisco switches, the Sony PSP, Nokia mobile phones, and other electronic products. Sounds good, right? Wrong! The company has stumbled its way through this year, reporting lower-than-expected sales, issuing profit warnings, finding trouble with its past practices in granting stock options and having to restate six years of financial statements, and attracting shareholder derivative lawsuits. And there was this unflattering article on Forbes.com. Ouch!
When it’s all done, this Marvell may wish it was in the comics business, where superheroes overcome villains and everyone makes a lot of money from the movie rights. Marvell’s example once more proves the verity of that classic adage: Be careful what you wish for.
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