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Gauging the Impact of Restructuring on Marvell’s Wireless Business

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Nov. 20 2020, Updated 10:52 a.m. ET

Marvell’s Mobile and Wireless segment

Marvell Technology Group’s (MRVL) Mobile and Wireless segment completes its cycle of storing, moving, and accessing data. This segment has been reporting strong declines after fiscal 4Q16 because the company exited the mobile market due to strong competition from Qualcomm (QCOM). The mobile and wireless segment’s contribution to total revenues fell from 35% in fiscal 3Q16 to 18% in fiscal 3Q17.

Marvell is now focusing on its wireless portfolio, which is made up of communications and applications processors, Wi-Fi, Bluetooth, GPS (global positioning system), and ZigBee, which is used in IoT (Internet of Things) and gaming devices.

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Mobile and Wireless segment’s earnings highlights

In fiscal 3Q17, Marvell’s Mobile & Wireless revenue fell 50% YoY (year-over-year) to $122.6 million. On a sequential basis, the segment’s revenue fell 11% as sales from the Mobile segment fell 55% to $4 million. The company has stopped investing in the mobile business, and but revenue is still coming from existing products. This segment’s revenue will likely fall until it reaches zero.

Excluding mobile, revenue from the Wireless and Others segment fell 7.7% sequentially as seasonal demand for high-end consumer products, STBs (set-top box), and streaming devices faded.

By comparison, Cisco (CSCO) reported 5% sequential revenue growth in wireless, while Broadcom’s (AVGO) Wifi and Bluetooth business, which it sold to Cypress (CY), also reported growth.

For fiscal 4Q17, Marvell expects its Mobile and Wireless segment’s revenue to fall sequentially as seasonal weakness reduces demand. It’s important to note that this guidance excludes businesses from the new Others segment, which the company will classify as discontinued operations.

Strategy for Mobile and Wireless

From fiscal 4Q17, Marvell plans to classify its wireless business and others market separately to help investors track the performance of its three core segments. In the wireless segment, it will focus on Wi-Fi technology and that too in high-performance products such as enterprise access points, automotive, smart home, and gaming, where it has a leadership position.

But which assets in its Mobile and Wireless segment the company will sell is still the question. Looking at its strategy, there’s a possibility that it may sell its communications and applications processors business.

Wireless market outlook

Technavio expects the global Wi-Fi chipset market to grow at a CAGR (compound annual growth rate) of more than 4% during 2016 to 2020. Marvell’s leadership position in non-mobile Wifi solutions will likely help it tap this market.

This renewed focus will help Marvell improve its earnings. The first signs of improvement were visible in its fiscal 3Q17 earnings.

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