SANTA CLARA, Calif.,
Nov. 2, 2016 /PRNewswire/
-- Marvell Technology Group Ltd. (NASDAQ: MRVL), a leader in
storage, networking, and connectivity semiconductor solutions,
today announced restructuring actions intended to refocus its
research and development (R&D), increase operational efficiency
and improve profitability. These actions are expected to be fully
implemented by the end of October
2017 to lower annual operating expenses from a current
annualized run rate of $1.08 billion
to the $820-840 million range.
Matt Murphy, Marvell's President
and Chief Executive Officer, explained, "The single biggest factor
limiting the potential of the Cloud and utilization of billions of
connected devices is the bandwidth of today's technology. By
focusing on our strengths in storing, moving, and accessing data at
high speeds, Marvell is well-positioned to enable the technology of
tomorrow."
Marvell is pursuing two initiatives to achieve this focus:
- Discontinuing specific R&D programs, streamlining
engineering processes, and consolidating R&D sites for greater
efficiency, which will eliminate approximately 900 positions
worldwide. The Company also expects a significant reduction in
legal and accounting costs. Altogether, these changes are expected
to lower annual operating expenses by $180-200 million.
- In addition, the Company plans to divest non-strategic
businesses with approximately $60
million in operating expenses and $100 million in revenue, based on a first half of
fiscal 2017 annualized run rate.
As a result of these actions, the Company expects to incur
charges of $90-110 million over the
next four quarters, including cash charges of $35-50 million. Restructuring and
restructuring-related charges include an estimate of severance,
asset impairment, lease termination fees, and other costs.
"These are difficult but necessary changes," Murphy said. "I'm
confident these actions will yield a greater return on our R&D
investments, deliver the innovation our customers need, and
generate the value our shareholders expect."
Marvell does not plan to hold a conference call with investors
and analysts in association with this press release. The Company
will discuss the restructuring and cost reduction plan in more
detail during its next quarterly earnings conference call, which is
scheduled following the release of its third quarter of fiscal 2017
results on Thursday, November 17,
2016 at 1:45 p.m. Pacific
Time.
Conference Call on Thursday, November
17, 2016
Marvell will conduct a conference call on
Thursday, November 17, 2016 at
1:45 p.m. Pacific Time to discuss
results for the third quarter of fiscal year 2017. Interested
parties may join the conference call by dialing 1-844-647-5488
or 1-615-247-0258, pass-code 11983150. The call will be webcast
by Thomson Reuters and can be accessed at the Marvell Investor
Relations website at http://investor.marvell.com/ with a replay
available following the call until December
17, 2016.
Forward-Looking Statements under the Private Securities
Litigation Reform Act of 1995
This press release contains
forward-looking statements within the meaning of the federal
securities laws that involve risks and uncertainties, including
those relating to the implementation of the proposed restructuring;
expected reduction in headcount; expected reduction in operating
expenses, including legal and accounting costs; expected increase
in operating efficiency, increase in profitability and divestment
of non-strategic businesses.
Words such as "anticipates," "expects," "intends," "plans,"
"projects," "believes," "seeks," "estimates," "can," "may," "will,"
"would" and similar expressions identify such forward-looking
statements. These statements are not guarantees of results and
should not be considered an indication of future activity or future
performance. Actual events or results may differ materially from
those described in this press release due to a number of risks and
uncertainties, including, but not limited to: Marvell's ability to
implement the proposed restructuring in a timely manner; the amount
and timing of anticipated charges associated with the
restructuring; Marvell's ability to increase its operational
efficiency and decrease its operating expenses to the anticipated
level; its ability to divest certain non-strategic businesses
within the anticipated timeframes and with the anticipated cost
savings; the effect of litigation or regulatory activities,
including the previously disclosed investigation by the United
States Securities and Exchange Commission ("SEC").
For other factors that could cause Marvell's results to vary
from expectations, please see the risk factors identified in
Marvell's Quarterly Report on Form 10-Q for the fiscal quarter
ended July 3, 2016 as filed with the
SEC on September 8, 2016, and other
factors detailed from time to time in Marvell's filings with the
SEC. Marvell undertakes no obligation to revise or update publicly
any forward-looking statements.
About Marvell
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, network infrastructure, and
wireless 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. To learn more, visit:
www.marvell.com.
Marvell® and the Marvell logo are registered trademarks of
Marvell and/or its affiliates.
For further information, contact:
John Spencer
Ahn
Investor
Relations
408-222-7544
johnahn@marvell.com
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SOURCE Marvell Technology Group Ltd