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Can Marvell Rebound in 2013?

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It’s hard to imagine that Marvell’s (MRVL) suffering can continue far into 2013. At the very least, the New Year can’t be any worst. The stock has dropped 50% in 2012.

Aside from weakness in the PC market, Marvell has been plagued by litigation, including being forced to pay $1.17 billion to Carnegie Mellon University in a patent infringement case pertaining to data storage.

That question will depend on how drastic the decline in PC demand proves to be. It does not bode well that analysts are suggesting that demand might drop from 9%in Q1 to the “teens” by the second half of 2013.

Also, the long term outlook is not great. Although Marvell has meaningful share in hard drives, which includes 100% of the controllers market, that market has flatlined.

Unfortunately, in the solid state drives (SSDs) business, where there is still ample room for growth, Marvell will find increased margin pressure from the likes of Micron (MU) and Intel (INTC).

Likewise, Marvell may face increased headwinds in the wireless market and see more of its TD-CDMA market share erode from new products from Qualcomm (QCOM).

Despite all of this, I still find the stock too cheap to ignore at current levels. There are a lot of things that need to go right for this stock to work, but too much has gone wrong to assume that things can get any worse.

If Marvell only reaches the midpoint of its 52-week high in 2013, this would still represent a 25% gain. That’s a risk worth taking.

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Stock Tickers: Author Disclosure: At the time of publication Richard did not hold any stock in the companies mentioned.
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