Why Marvell Technology Shares Were Sacked
Dec 26th 2012 8:31PM
Updated Dec 26th 2012 8:38PM
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of Marvell Technology (NAS: MRVL) , a designer of analog, mixed-signal, and digital signal microprocessing chips for mobile devices, sank as much as 13% following an announcement that it was found guilty in a patent infringement case brought against the company by Carnegie Mellon University.
So what: Back in March, Carnegie Mellon sued Marvell over the use of two patents that it claimed detect data stored on a computer's hard-disk drive by filtering out unwanted electrical signals. According to Carnegie Mellon, Marvell used its patented technology in at least nine types of innovations. With the jury's unanimous guilty verdict, U.S. District Judge Nora Barry Fischer rendered a $1.17 billion fine against Marvell and according to the victorious group of lawyers, K&L Gates LLP, the total penalty could triple from current levels.
Now what: Now shareholders cross their fingers and hope that the fine levied against Marvell doesn't triple. To me, that seems highly unlikely and I wouldn't be shocked to see an appeal drag this verdict out even further. In the interim, Marvell shares, which already seemed inexpensive, just got even cheaper, and I would suggest giving the company another look if you're a deep value investor.
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