Marvell Forecasts 5% Q1 Revenue Hit From Virus-Induced Supply-Chain ‘Disruptions’
Marvell Technology entered its fiscal 2021 in early February “trying to assess the near-term impact from the coronavirus,” said CEO Matthew Murphy on a Q4 call Wednesday. Before the outbreak gained intensity in January, “our bookings and backlog were getting…
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stronger,” he said. But as the spread broadened, “we started to see supply chain-related impacts to our business,” he said. It’s impossible to “fully quantify” what drag COVID-19 will have because the situation “remains fluid,” he said. “However, our revenue guidance for the first quarter includes a 5% reduction based on what we know so far.” Marvell’s fiscal Q1 ends in early May. The “ultimate impact” of the coronavirus “is still unknown, and assessing the full magnitude at this point is not feasible,” said Chief Financial Officer Jean Hu. Two types of supply-chain “disruptions” are at play, said Murphy. Marvell’s suppliers are having trouble sourcing components from heavily impacted regions inside China, plus its customers’ factories are not at “full capacity,” he said. “We have really no way to know” if COVID-19 will cause any long-term “demand destruction,” he said. Murphy reads the same reports as everyone else that “factories are gradually coming back online,” and people in China “are actually going back to work,” he said. “But we don't really know what the ripple effect is to the global economy, candidly, from this disruption.” Shares closed 10.4% higher Thursday at $24.93.