Marvell Technology Shares Slip 2% on Plans to Cut 900 Jobs, Reduce Costs, Sell Assets

Marvell Technology Group (MRVL) shares were lower 2% on Thursday after the fabless semiconductor provider of application-specific standard products said it will cut 900 jobs in a move to reduce assets and as it plans to sell non-strategic businesses.

The company said it expects the actions to be fully implemented by end of October 2017, lowering annual operating expenses from a current annualized run rate of $1.08 billion to the $820 million – $840 million range.

“The single biggest factor limiting the potential of the Cloud and utilization of billions of connected devices is the bandwidth of today’s technology,” CEO Matt Murphy said in a statement. “By focusing on our strengths in storing, moving, and accessing data at high speeds, Marvell is well-positioned to enable the technology of tomorrow.”

The 900 job cuts will come from discontinuing specific research and development programs, streamlining engineering processes, and consolidating R&D sites for greater efficiency.

The company also expects a significant reduction in legal and accounting costs and altogether, these changes are expected to lower annual operating expenses by $180 million to 200 million.

In addition, Marvel said it plans to divest non-strategic businesses with approximately $60 million in operating expenses and $100 million in revenue, based on a first half of fiscal 2017 annualized run rate.

As a result, the company expects to incur charges of $90 million to 110 million over the next four quarters, including cash charges of $35 million to 50 million.

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