Zacks Analyst Blog Highlights: Amerisafe, Marvell, Intel, Texas Instruments and LSI

Mar 07, 2011, 09:30 ET from Zacks Investment Research, Inc.

CHICAGO, March 7, 2011 /PRNewswire/ -- Analyst Blog features: Amerisafe Inc. (AMSF), Marvell Inc. (Nasdaq: MRVL), Intel Corp. (Nasdaq: INTC), Texas Instruments Inc. (NYSE: TXN) and LSI Corp. (NYSE: LSI).


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Here are highlights from Friday's Analyst Blog:

Amerisafe's Results Poor, Outlook Dim

Amerisafe Inc.'s (AMSF) fourth quarter operating earnings per share of 38 cents came in line with the Zacks Consensus Estimate but were modestly ahead of 32 cents reported in the prior-year quarter.

Operating income increased 8.5% year over year to $7.1 million, primarily on lower share count. Including net realized gains of $0.1 million against $0.02 million in the year-ago period, net income for the reported quarter was $7.3 million or 39 cents per share, compared with $6.6 million or 28 cents in the prior-year quarter.

Results appreciated primarily due to higher premiums written and net realized gains along with lower expenses and improved combined ratio, which further drove the return on average equity (ROE). However, lower premiums earned and low investment yield hampered the top line growth.

The accident years 2006, 2007 and 2008 primarily contributed to favourable development, reducing loss and loss adjustment expenses (LAE) by $7.7 million. This also generated the marginal improvement in current accident year loss ratio to 83.5% from 90.2% in the year-ago quarter.

Amerisafe's total revenue for the quarter was $60.5 million, down 1.3% from $63.1 million in the prior-year quarter, but exceeded the Zacks Consensus Estimate of $58.0 million. Gross premiums written for the quarter were $52.1 million, up 5.6% year over year.

The growth was driven by low negative payroll audits and related premium adjustments for policies written in previous periods. These adjustments reduced premiums written by $2.5 million in the reported quarter compared to $8.2 million in the year-ago quarter.

Marvell Misses Our Estimate

Marvell Inc. (Nasdaq: MRVL) reported fourth quarter fiscal 2011 adjusted earnings per share (EPS) of 35 cents, below the Zacks Consensus Estimate of 37 cents.


Marvell reported revenues of $900.5 million in the fourth quarter, up 7.0% from $842.5 million in the prior-year quarter. The quarter's revenue was below the Zacks Consensus Estimate of $924.0 million and was at the lower end of the company's guidance range of $900.0–$950.0 million. The fourth quarter was affected to some extent by seasonal declines in the company's mobile and wireless end market business. But Marvell's products are competitive and may be expected to perform well in the coming years.

Operating Results

In the fourth quarter, gross margin on a GAAP basis declined 100 basis points (bps) year over year to 58.7%. Gross margin declined as a result of increase in cost of sales. Operating margin on a GAAP basis decreased 50 bps year over year to 23.9%. Total operating expenses were $312.9 million, up 5.4% from $296.9 million in the earlier-year quarter.

GAAP net income in the quarter was $222.8 million, or 33 cents per share, compared to $204.8 million, or 31 cents in the year-earlier period. Excluding stock-based compensation, net income on non-GAAP basis was $241.6 million, or 35 cents per share, compared to $235.5 million, or 35 cents in the year-earlier period.

Balance Sheet & Cash Flow

Marvell ended the quarter with cash, equivalents and short-term investments of $2.93 billion, up from $2.68 billion in the prior quarter. Accounts receivables were $459.4 million, compared to $468.0 million in the prior quarter. Inventories increased to $245.5 million, up from $239.2 million preceding quarter. The company carries no long-term debt.

Cash from operating activities was $250.8 million in the fourth quarter, compared to $281.1 million in the prior-year quarter. Free cash flow was $213 million, compared to $253 million reported in the year-ago period.

Our Take

The quarter's results were disappointing, as the bottom line was below the Zacks Consensus Estimate. We remain concerned about stiff competition in the semiconductor market from major players, such as Intel Corp. (Nasdaq: INTC), Texas Instruments Inc. (NYSE: TXN) and LSI Corp. (NYSE: LSI). We are also concerned about the significant number of pending lawsuits and the company's European exposure.

Currently, Marvell has a short-term Sell recommendation, as indicated by the Zacks #4 Rank.

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