Mobile chipmaker Marvell is suffering as demand for 3G chips slowly dies as the rise of 4G LTE demands different chips.
The company announced that its quarterly gross margin fell as demand for its chips used in third-generation mobile communication outweighed a rise in sales of its more profitable 4G LTE chips.
Marvell did better than expected in the first-quarter but overall the cocaine nose jobs of Wall Street are predicting worse to come.
Smartphone sales growth is shifting away from North America to China where buyers favour handsets priced below $200.
Chief Financial Officer Michael Rashkin said in a post-earnings conference call that the company’s mix was skewed to 3G even though LTE did well and its margins came slightly below what was expected in the quarter.
Marvell’s gross margin shrunk to 48.4 percent for the first quarter ended May 3 from 54.3 percent a year earlier.
The company said it expects second-quarter adjusted profit of 28 cents per share and revenue of $940 million-$980 million.
Wall Street was expecting a profit of 26 cents per share on revenue of $930.1 million.
The company has benefited from the multi-billion dollar rollout of long-term evolution (LTE) 4G networks in China, which accounts for a third of Marvell’s total revenue.
Marvell’s first-quarter net income rose to $99.5 million, or 19 cents per share, from $53.2 million, or 11 cents per share, a year earlier. Excluding items, earnings were 27 cents per share.
Revenue jumped 30 percent to $957.8 million.