Marvell Technology Group (MRVL – Snapshot Report) reported third-quarter fiscal 2015 adjusted earnings (including stock-based compensation but excluding amortization, acquisition, restructuring and legal related expenses) of 23 cents per share, which beat the Zacks Consensus Estimate of 22 cents.

Earnings declined both sequentially and year over year, mainly because the company adjusted tax benefits in both historical periods. Significantly higher non-operating income in the fiscal second quarter and a much higher share count in the last quarter (compared to the year-ago quarter) also impacted comparisons.

Quarter Details

Marvell’s revenues fell 3.3% sequentially and 0.1% year over year to $930.1 million. Moreover, it was significantly lower than the company’s guidance range of $960 million–$1.0 billion and also missed the Zacks Consensus Estimate of $980 million. The lower-than-expected top-line performance was mainly due to lower revenues from its networking business and soft performance by mobile business which more than offset the stronger storage business.

By end markets, storage revenues were positively impacted by strong demand from SSD customers and share gains in the HDD segment. Revenues from the storage end market were up 3% on a quarterly basis.

The networking business decreased 7% sequentially as the company witnessed lower demand by service providers.

Although continuous 4G LTE ramp in China was a positive, lower-than-expected demand from the 3G mobile business impacted sales in mobile and wireless end markets, which declined 13% from the last quarter.

Marvell’s adjusted gross profit was $472.1 million, down 2.6% sequentially and up 1.3% from the year-ago quarter. The gross margin expanded 34 basis points (bps) sequentially and 69 bps on a year-over-year basis to 50.8% primarily due to a favorable product mix.

Adjusted operating expenses dropped 1.5% sequentially as a result of focused cost control, but were more or less consistent with the year-ago quarter levels.