Tuesday, October 03, 2006

marvell implodes

Last night after the close Marvell Technologies (MRVL) preannounced another disappointing quarter. They already guided lower last quarter but things for Q3 are even worse than that guidance apparently. And they are plagued by options backdating investigations.

This is a stock that I probably should not have been in to begin with and I am paying the price. First of all, I don't have a complete understanding of their business and this is always a recipe for disaster. Second, it is a play on PC sales after Vista. Personally I don't think that a strong wave of PC buying will follow Vista's release. Vista is underwhelming. Most people will be far better served by getting a Mac or waiting a couple of quarters for the 1.0 bugs to get sorted out. It's not something that I feel will significantly drive PC sales.

Ultimately I got into MRVL because Cramer recommended it. That's just a bad reason. Cramer's brings a lot of ideas and discipline to the table. His constraints and timeframe are far different than mine. If I'm going get into a semiconductor play I need to get into a company that I really believe in. At sixteen and a half this looks like a buying opportunity for the longs. I don't have enough confidence in the MRVL story and the management team to pull the trigger here.

No comments: