Marvell committee investigating internal accounting controls

Marvell Technology Group Ltd. (NASDAQ: MRVL) said it has reported preliminary financial results for the second quarter of fiscal year 2016, ended August 1, 2015.

Revenue for the quarter hit USD711 million, while GAAP net loss was USD382 Million.

The company also announced that the audit committee of the company´s board of directors is conducting an independent investigation of certain accounting and internal control matters in the second quarter of fiscal 2016.

The investigation consists of a review of certain revenue recognition issues in the second quarter of fiscal 2016 and any associated issues with whether senior management´s operating style during the period resulted in an open flow of information and communication to set an appropriate tone for an effective control environment.

More specifically, the investigation has focused on the approximately 7-8 percent of revenue recognized in the second quarter of fiscal 2016 that, based upon the original customer request date, would have been received and earned in the third quarter of fiscal 2016 and is now no longer available for receipt in that quarter. Such percentage represents an increase over the prior four quarters and is indicative of softening demand for certain of the company´s products. This was particularly the case in the storage end market where, as a result of a weaker global economy and a slow-down in the PC market, the company saw weaker than expected demand for HDD products as the overall total available market declined.

The committee and company management are also discussing potential enhancements to the company´s internal controls and remedial actions to address the items discussed above and the adequacy of financial reporting resources. As a result, the company is not providing any guidance as to the expected results for the third quarter of fiscal 2016 at this time.

Marvell is a global leader in providing complete silicon solutions and Kinoma® software enabling the “Smart Life and Smart Lifestyle.”