Marvell Technology plunges as company blames inventory reductions for weak Q3, guidance

Marvell Technology (NASDAQ:MRVL) shares plunged more than 8% in extended-hours trading after the semiconductor company posted third-quarter results that missed expectations and offered a weak outlook for the fourth-quarter, citing inventory reductions at its customers.

For the period ending October 29, Marvell (MRVL) earned 57 cents per share, excluding one-time items, on $1.54B in revenue. The company said inventory reductions, in particular at the company's storage customers, impacted the results.

Analysts were expecting the company to earn 59 cents per share on $1.56B in revenue.

Looking ahead, Marvell (MRVL) said it expects fourth-quarter revenue to be between $1.33B and $1.43B, below the $1.62B that analysts were expecting. Inventory reductions were also blamed for the shortfall.

"Inventory reductions, in particular at our storage customers, are impacting our near-term results and guidance, and we are working closely with them to manage their change in demand in an orderly fashion to clear the path to a resumption of growth," Matt Murphy, Marvell's President and CEO, said in a statement.

The company also expects adjusted gross margin in the period to be about 64%, compared to estimates of 65.1%.

Last month, Credit Suisse initiated coverage on the semiconductor industry with an overweight rating, highlighting Marvell Technology (MRVL) among several other companies due to their long-term growth potential.