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Marvell Technology misses Q1 revenue expectations, shares drop 4%

Chipmaker Marvell Technology missed Wall Street expectations for first-quarter revenue on Thursday, hurt by weak client spending in its wireless carrier and enterprise markets.

The company reported revenue of $1.16 billion, compared with estimates of $1.17 billion, according to LSEG data.

Shares of the Santa Clara, California-based company fell around 2% in extended trading.

Marvell’s results signal that the company continues to grapple with weaker demand in its consumer markets as well as a cut back on IT spend by its enterprise clients due to signs of a soft economy.

“We see a favorable setup for the second half of this fiscal year, driven by continued growth in data center and the beginning of a recovery in enterprise networking and carrier infrastructure,” Marvell CEO Matt Murphy said.

Excess chip inventory at its carrier clients and telecom operators have prompted them to clear their built-up stock and withhold on placing new chip orders, hitting demand for firms like Marvell.

The company forecast second-quarter revenue in line with analysts’ estimates. It also sees adjusted earnings per share of 29 cents, plus or minus 5 cents, compared with estimates of 30 cents.

However, the company’s data center segment, which includes its custom chips business, continues to outperform as cloud computing firms shore up spending on hardware used to power artificial intelligence.

Data center revenue jumped 87% to $816.4 million, higher than estimates of $772.6 million.

Revenue in the enterprise networking segment fell 58% to $153.1 million, while the company’s carrier infrastructure unit declined 75% to $71.8 million.

On an adjusted basis, the company earned 24 cents per share, compared with estimates of 25 cents. Reuters

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