In a regulatory filing today, Starboard Value disclosed a 6.7% stake in Marvell Technology, saying that the chip maker is undervalued and that it has activist intentions. As is typical in a disclosure about an activist stake, the firm said it plans to engage in actions that may include contacting management and other actions.
Marvell shares tumble amid accounting probe
Marvell Technology’s accounting practices are currently under investigation, which has resulted in pressure on its stock. Even today, the company’s shares didn’t move much on the news about Starboard’s involvement. They are up 1.27% at $8.78 per share as of this writing, although that’s still down from where they were trading earlier this morning.
The stock has tumbled 44% over the last year, with most of that coming after Marvell disclosed that it is reviewing its accounting methods and also posted results that were weaker than expected, notes The Wall Street Journal. Then in December, the chip maker disclosed that federal investigators were looking into its accounting and declining earnings results.
The Wall Street Journal initially reported on Starboard’s stake in the chip maker last night, and that report was then confirmed by today’s filing with the Securities and Exchange Commission.
Starboard banks on Marvell’s margins
Starboard Value believes Marvell Technology can cut costs to boost margins, reports The Journal, citing unnamed sources. The chip maker already announced late last year that it’s cutting its global workforce by 17% and scaling back its mobile device business, which Starboard wants it to exit completely. Additionally, Marvell is sitting on approximately $2.3 billion in cash, which has been ripe for activist pressure as many have demanded that the $4.5 billion company distribute that cash to shareholders.
Stifel Nicolaus analyst Kevin Cassidy told Bloomberg that he thinks the firm’s activist involvement will help the company as mismanagement has plagued it for some time. He thinks the firm’s advisors will be able to suggest some good changes that will help it move past the recent operational missteps and bolster its strong businesses.
Chip makers have been frequent targets for Starboard
Starboard has taken an interest in other chip makers recently as well, as it has begun ten activist campaigns in companies after taking a stake of over 5%, which requires public disclosure. The Wall Street Journal also reports that the firm has also taken on “several smaller ones” as well. Among those that have been targeted by the firm are TriQuint Semiconductor and Integrated Silicon Solution, notes Fortune. Many of the chip makers targeted by Starboard ended up putting themselves up for sale after the firm pushed for management and/ or board changes.
Yahoo, another target of Starboard, is dominating the headlines today as management said they will consider strategic options amid demands for change from the activist value investing firm. The firm is also targeting Macy’s, currently seeking a real estate joint venture.