Marvell Technology Group Ltd. (MRVL) up as Top Executives Resign
Shares of Hamilton, Bermuda, based Marvell Technology Group Ltd. (MRVL) rose on Tuesday, bucking the trend of a lower day in stocks across the board. Marvell's stock was up 13.10%, rising $1.26 per share, to close at $10.88, on volume of 20,773,815 shares. The stock was up sharply following the announcement on Tuesday that both the company's chief executive officer and president have resigned their positions. The resignations are seen as a positive in the market since the company has been plagued with problems in recent months.
On Tuesday Marvell announced that Chief Executive Officer Sehat Sutardja and President Weili Dai had resigned from their positions, effective immediately. However, both will remain on the company's board of directors, with Sehat Sutardja continuing to serve as Chairman of the Board. Both executives were the founders of the company in 1995. The board of directors has engaged the services of a leading international executive search firm to conduct a search for a new CEO and president.
The announcement comes barely a week after the company announced the findings of an audit committee investigation that had uncovered problems with the company’s internal controls. Those problems resulted in delays the completion of its financial statements, as well as the filing of its Annual Report on Form 10K for fiscal 2016 and its Quarterly Reports on Form 10K for both the second and third quarters of 2016.
In addition, Marvell expects that revenue for its fiscal year ended January 31, 2016, will be lower than their fiscal 2015 revenue. The decline has been driven by decreased demand for its storage products, as well as the restructuring of its mobile platform business. The company expects to post a net loss for 2016, owing to a $750 million legal settlement as well as costs associated with restructuring. Analysts are expecting a decline of 25% in 2016 revenue, which will be the lowest total since fiscal 2007.
In the interim, the Board has formed an Interim Office of the Chief Executive, which will oversee day-to-day leadership of the company. The Interim Office will be headed by Ms. Maya Strelar-Migotti, current Executive Vice President, Smart Networked Devices and Solutions (SNDS) Business Group, and Dr. Pantelis Alexopoulos, current Executive Vice President of the Storage Business Group. Each of these two executives will have full authority as Chief Executive Officer until permanent replacements can be found.
"The Board would like to thank Sehat and Weili for their enormous contributions and service since they founded Marvell in 1995," said Arturo Krueger, Marvell's lead outside director. "Marvell has revolutionized the world through its innovative technology and breakthrough designs in the semiconductor industry. However, the Board believes that the time has come to move in a new leadership direction. The Company's highest priority is to leverage Marvell's strong core business and technology to drive the next stage of product innovation and profitable growth...We look forward to demonstrating our continuing commitment to excellence in our products and service, as well as to creating value for our shareholders."
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