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Marvell Technology Group Ltd. Reports Fiscal Third Quarter Results

Revenue: $803.1 Million, Up 25 Percent Sequentially

Santa Clara, California (December 3, 2009) – arvell Technology Group Ltd. (Nasdaq: MRVL), a world leader in storage, communications and consumer silicon solutions, today reported financial results for the third quarter of fiscal 2010, ended October 31, 2009.

Net revenue for the third quarter of fiscal 2010 was $803.1 million, a 25 percent sequential increase from $640.6 million in the second quarter of fiscal 2010, ended August 1, 2009, and a 2 percent increase from $791.0 million in the third quarter of fiscal 2009, ended November 1, 2008.

GAAP net income was $201.6 million, or $0.31 per share (diluted), for the third quarter of fiscal 2010, as compared to GAAP net income of $58.5 million, or $0.09 per share (diluted), for the second quarter of fiscal 2010. For the third quarter of fiscal 2009 GAAP net income was $70.9 million, or $0.11 per share (diluted).

Non-GAAP net income was $231.8 million, or $0.35 per share (diluted), for the third quarter of fiscal 2010, an increase of 95 percent from non-GAAP net income of $118.7 million, or $0.18 per share (diluted), for the second quarter of fiscal 2010, and a 59 percent increase compared with non-GAAP net income of $145.3 million, or $0.23 per share (diluted), for the third quarter of fiscal 2009.

"We are very pleased with the revenue growth we experienced in the third quarter of fiscal 2010," said Dr. Sehat Sutardja, Marvell Chairman and Chief Executive Officer. "Our sequential revenue growth was better than our revised guidance provided on October 26, 2009, as order momentum improved across all our addressable end-markets. Our results during the third quarter demonstrate that financial discipline is firmly entrenched in Marvell's long-term business model as we again delivered significant improvement across all financial metrics."

Marvell reports net income or loss, basic and diluted net income or loss per share in accordance with U.S. generally accepted accounting principles (GAAP) and on a non-GAAP basis as outlined below. Reconciliations of GAAP net income or loss to non-GAAP net income for the three months ended October 31, 2009, August 1, 2009 and November 1, 2008, respectively, appear in the financial statements below.

GAAP gross margin for the third quarter of fiscal 2010 was 57.5 percent, compared to 55.0 percent for the second quarter of fiscal 2010 and 52.1 percent for the third quarter of fiscal 2009. Non-GAAP gross margin for the third quarter of fiscal 2010 increased to 57.8 percent, compared to 55.3 percent for the second quarter of fiscal 2010 and 52.3 percent for the third quarter of fiscal 2009.

Shares used to compute GAAP net income per diluted share for the third quarter of fiscal 2010 were 660 million shares, compared with 648 million shares in the second quarter of fiscal 2010 and 631 million shares in the third quarter of fiscal 2009. Shares used to compute non-GAAP net income per diluted share for the third quarter of fiscal 2010 were 664 million shares, compared with 652 million shares for the second quarter of fiscal 2010 and 633 million shares for the third quarter of fiscal 2009.

Cash flow from operations for the third quarter of fiscal 2010 was $203.5 million, up 12 percent sequentially from $182.3 million in the second quarter of fiscal 2010 and down 21 percent from $258.5 million in the third quarter of fiscal 2009. Free cash flow, defined as cash flow from operations less capital expenditures and purchases of IP licenses, was $195.9 million, up 12 percent sequentially from $175.3 million in the second quarter of fiscal 2010 and down 20 percent from $244.3 million in the third quarter of fiscal 2009.

Conference Call

Marvell will be conducting a conference call on December 3, 2009 at 1:30 p.m. PST to discuss results for the third quarter ended October 31, 2009. Interested parties may dial-in to the conference call at 1-866-271-0675, pass-code 78345706. The call is being webcast by Thomson Reuters and can be accessed at Marvell's website under the Investor Events section of the Investor Relations page at http://www.marvell.com/investors/events.jsp. Replay on the internet will be available following the call until January 3, 2009.

Discussion of Non-GAAP Financial Measures

Non-GAAP financial measures exclude stock-based compensation expense as well as charges related to acquisitions, restructuring, gains and other charges that are driven primarily by discrete events that management does not consider to be directly related to Marvell's core operating performance. Non-GAAP earnings per share is calculated by dividing non-GAAP net income by non-GAAP weighted average shares outstanding (diluted). For purposes of calculating non-GAAP earnings per share, the GAAP weighted average shares outstanding (diluted) is adjusted to exclude the potential benefits of compensation costs expected to be incurred in future periods, but not yet recognized in the financial statements. The expected compensation costs are treated as proceeds assumed to be used to repurchase shares under the GAAP treasury stock method.

Marvell believes that the presentation of non-GAAP financial measures provide important supplemental information to management and investors regarding financial and business trends relating to Marvell's financial condition and results of operations. While Marvell uses non-GAAP financial measures as a tool to enhance its understanding of certain aspects of its financial performance, Marvell does not consider these measures to be a substitute for, or superior to, the information provided by GAAP financial measures. Consistent with this approach, Marvell believes that disclosing non-GAAP financial measures to the readers of its financial statements provides such readers with useful supplemental data that, while not a substitute for GAAP financial measures, allows for greater transparency in the review of its financial and operational performance. For further information regarding why Marvell believes that these non-GAAP measures provide useful information to investors, the specific manner in which management uses these measures, and some of the limitations associated with the use of these measures, please refer to Marvell's Current Report on Form 8-K filed today with the SEC. The Form 8-K is available on the SEC website at www.sec.gov as well as on the Marvell website in the Investor Relations section at www.marvell.com.

About Marvell

Marvell (NASDAQ: MRVL) is a global leader in the development of storage, communications and consumer silicon solutions. Marvell's diverse product portfolio includes switching, transceiver, communications controller, wireless, and storage solutions that power the entire communications infrastructure, including enterprise, metro, home, and storage networking. As used in this release, the terms "Company" and "Marvell" refer to Marvell Technology Group Ltd. and its subsidiaries. For more information visit www.marvell.com.

Forward-Looking Statements

This press release contains forward-looking statements that involve risks and uncertainties, including statements regarding the Company's expectations regarding the entrenchment of financial discipline; and statements concerning the Company's use of non-GAAP financial measures as important supplemental information. These statements are not guarantees of results and should not be considered as an indication of future performance. Actual events or results may differ materially from those described in this document due to a number of risks and uncertainties, including, among others, the Company's reliance on major customers and suppliers; market acceptance of new products; uncertainty in the worldwide economic environment; successful execution of the Company's restructuring plan and other risks detailed in Marvell's SEC filings. When Marvell files its Form 10-Q for the third quarter of fiscal 2010, the financial statements may differ from the results disclosed in this press release because judgments and estimates that management used in preparing the financial results reported in this press release may need to be updated to the date of the filing. The Company's results also remain subject to review by the Company's independent registered public accounting firm. For other factors that could cause Marvell's results to vary from expectations, please see the risk factors identified in Marvell's latest Annual Report on Form 10-K for the year end January 31, 2009, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, as filed with the SEC and other factors detailed from time to time in Marvell's filings with the SEC. Marvell undertakes no obligation to revise or update publicly any forward-looking statements.


                        Marvell Technology Group Ltd.
              Condensed Consolidated Statements of Operations
                                 (Unaudited)
                  (In thousands, except per share amounts)

                       Three Months Ended            Nine Months Ended
                 October 31, August 1, November 1, October 31, November 1,
                    2009       2009       2008        2009        2008

Net revenue      $803,098    $640,620   $791,046   $1,965,152  $2,437,696
Cost of goods
 sold             341,617     288,059    379,137      887,306   1,173,892
Gross profit      461,481     352,561    411,909    1,077,846   1,263,804
Operating
 expenses:
  Research and
   development    212,873     196,190    234,222      615,152     722,411
  Selling and
   marketing       35,442      32,907     41,158      102,260     129,080
  General and
   administrative  16,660      29,469     28,869      148,856      72,809
  Amortization
   and write-
   off of
   acquired
   intangible
   assets          26,450      26,446     34,814       83,252     105,049
    Total
     operating
     expenses     291,425     285,012    339,063      949,520   1,029,349
Operating
 income           170,056      67,549     72,846      128,326     234,455
Interest and
 other income
 (expense), net    (1,373)        279     11,543       (1,254)      6,097
Income before
 income taxes     168,683      67,828     84,389      127,072     240,552
Provision
 (benefit)
 for income
 taxes            (32,916)      9,335     13,443      (21,563)     28,300
Net income       $201,599     $58,493    $70,946      148,635     212,252

Basic net
 income per
 share              $0.32       $0.09      $0.12        $0.24       $0.35
Diluted net
 income per
 share              $0.31       $0.09      $0.11        $0.23       $0.34

Shares used in
 computing
 basic earnings
 per share        623,613     620,881    611,945      621,057     606,676
Shares used in
 computing
 diluted
 earnings per
 share            659,739     648,110    630,810      647,863     630,997


                          Marvell Technology Group Ltd.
             Reconciliation of GAAP Net Income to Non-GAAP Net Income:
                                 (Unaudited)
                    (In thousands, except per share amounts)

                       Three Months Ended            Nine Months Ended
                 October 31, August 1, November 1, October 31, November 1,
                    2009       2009       2008        2009        2008
GAAP net
 income          $201,599     $58,493    $70,946     $148,635    $212,252
Stock-based
 compensation      34,377      30,015     39,578       96,040     132,431
Amortization
 and write-off
 of acquired
 intangible
 assets            26,450      26,446     34,814       83,252     105,049
Restructuring (b)   1,919       4,956          -       15,211           -
Legal/Tax
 related
 matters (a)      (32,569)     (1,202)         -       38,229           -
Other (b)               -           -          -          990           -
Non-GAAP net
 income          $231,776    $118,708   $145,338     $382,357    $449,732

GAAP weighted
 average
 shares -
 diluted          659,739     648,110    630,810      647,863     630,997
  Non-GAAP
   adjustment       4,297       3,651      1,740        2,938         168
Non-GAAP
 weighted
 average
 shares
 diluted (c)      664,036     651,761    632,550      650,801     631,165

GAAP
 diluted
 net income
 per share          $0.31       $0.09      $0.11        $0.23       $0.34
Non-GAAP
 diluted
 net income
 per share          $0.35       $0.18      $0.23        $0.59       $0.71

GAAP gross
 profit:         $461,481    $352,561   $411,909   $1,077,846  $1,263,804
  Stock-based
   compensation     2,389       1,810      1,795        8,315       8,623
  Other                 -           -          -          990           -
Non-GAAP gross
 profit          $463,870    $354,371   $413,704   $1,087,151  $1,272,427

GAAP gross
 profit as
 a % of
 revenue             57.5%       55.0%      52.1%        54.8%       51.8%
  Stock-based
   compensation       0.3%        0.3%       0.2%         0.4%        0.4%
  Other                 -           -          -          0.0%          -
Non-GAAP
 gross profit        57.8%       55.3%      52.3%        55.3%       52.2%

GAAP research
 and
 development:    $212,873    $196,190   $234,222     $615,152    $722,411
  Stock-based
   compensation   (24,134)    (22,193)   (30,607)     (68,064)    (93,537)
  Restructuring    (1,338)     (3,526)         -      (10,704)          -
  Legal/Tax
   settlement           -       1,820          -        1,820           -
Non-GAAP
 research
 and
 development     $187,401    $172,291   $203,615     $538,204    $628,874

GAAP selling
 and marketing:   $35,442     $32,907    $41,158     $102,260    $129,080
  Stock-based
   compensation    (4,087)     (3,659)    (6,896)     (11,457)    (20,403)
  Restructuring       (51)       (523)         -       (1,839)          -
  Legal/Tax
   settlement           -         659          -          659           -
Non-GAAP
 selling
 and marketing    $31,304     $29,384    $34,262      $89,623    $108,677

GAAP general
 and
 administrative:  $16,660     $29,469    $28,869     $148,856     $72,809
  Stock-based
   compensation    (3,767)     (2,353)      (280)      (8,204)     (9,868)
  Restructuring      (530)       (907)         -       (2,668)          -
  Legal/Tax
   settlement           -         158          -      (71,842)          -
Non-GAAP
 general
 and
 administrative   $12,363     $26,367    $28,589      $66,142     $62,941

GAAP
 provision
 (benefit)
 for income
 taxes:          $(32,916)     $9,335    $13,443     $(21,563)    $28,300
  Tax reserve
   reversal        27,317           -          -       27,317           -
  Income tax
   payable
   adjustment       5,252           -          -        5,252           -
Non-GAAP
 provision
 (benefit)
 for income
 taxes             $(347)      $9,335    $13,443      $11,006     $28,300

(a)  Fiscal quarter ended October 31, 2009 includes a $27.3 million

     benefit as a result of the expiration of the statute of limitations
     related to a tax contingency reserve.  In addition, a $5.3 million
     income tax benefit was recorded relating to the adjustment of a prior
     year deferred tax asset.  Fiscal quarter ended August 1, 2009
     includes the net impact of our payroll related settlement with the
     IRS on related to our historical stock option granting practices.  As
     the composition of the settlement was different than the initial
     reserve, the net benefit includes a $2.6 million benefit to operating
     expense with an offset of $1.4 million of interest expense.  The nine
     months ended October 31, 2009 also includes the $72 million charge
     taken in fiscal Q1'10 in connection with the settlement of the class
     action litigation.

(b)  Amount represents restructuring related costs including severance
     costs from reductions in force, asset impairment charges and
     facilities consolidation charges.  The nine months ended October 31,
2009
including under-utilization charges related to the rampdown of the Malaysia test operations. (c) For purposes of calculating non-GAAP diluted net income per share, the GAAP diluted weighted average shares outstanding is adjusted to exclude the benefits of SFAS 123R compensation costs attributable to future services and not yet recognized in the financial statements that are treated as proceeds assumed to be used to repurchase shares under the GAAP treasury method.


                      Marvell Technology Group Ltd.
                  Condensed Consolidated Balance Sheets
                               (Unaudited)
                             (In thousands)

                                          October 31,       January 31,
Assets                                       2009              2009
Current assets:
  Cash, cash equivalents, and
   short-term investments                $1,464,187          $951,909
  Accounts receivable, net                  394,319           222,101
  Inventories                               239,209           310,654
  Prepaid expenses, deferred income taxes
   and other current assets                  72,796            75,651
    Total current assets                  2,170,511         1,560,315
Property and equipment, net                 349,276           390,853
Long-term investments                        39,274            40,541
Goodwill and acquired intangible assets,
 net                                      2,201,016         2,284,164
Other non-current assets                    127,643           138,327
    Total assets                         $4,887,720        $4,414,200

Liabilities and Shareholders' Equity
Current liabilities:
  Accounts payable                         $317,233          $139,028
  Accrued liabilities                       201,033           175,135
  Income taxes payable                       14,671            35,803
  Deferred income                            71,273            57,895
  Current portion of capital lease
   obligations                                1,901             1,787
    Total current liabilities               606,111           409,648
Capital lease obligations, net of current
 portion                                      1,011             2,451
Other long-term liabilities                 174,298           173,034
    Total liabilities                       781,420           585,133

Shareholders' equity:
  Common stock                                1,249             1,233
  Additional paid-in capital              4,501,258         4,372,265
  Accumulated other comprehensive income
   (loss)                                    (1,129)             (718)
Accumulated deficit                        (395,078)         (543,713)
    Total shareholders' equity            4,106,300         3,829,067
    Total liabilities and shareholders'
     equity                              $4,887,720        $4,414,200

                       Marvell Technology Group Ltd.
            Condensed Consolidated Statements of Cash Flows
                               (Unaudited)
                              (in thousands)

                         Three Months Ended         Nine Months Ended
                        October 31,  November 1,  October 31,  November 1,
                           2009         2008         2009         2008
Cash flows from
 operating activities:
Net income               $201,599     $70,946      $148,635     $212,252
Adjustments to reconcile
 net income to net cash
 provided by operating
 activities:
  Depreciation and
   amortization            24,571      29,136        74,976       85,786
  Stock-based
   compensation            34,377      39,578        96,040      132,431
  Amortization and
   write-off
   of acquired intangible
   assets                  26,450      34,814        83,252      105,049
  Fair market value
   adjustment to Intel
   inventory sold         (10,807)     (3,406)      (13,883)     (14,163)
  Excess tax benefits
   from stock-based
   compensation              (136)        138          (205)        (356)
  Deferred income taxes       263           -         6,131            -
  Changes in assets and
   liabilities, net of
   assets acquired and
   liabilities assumed in
   acquisitions:
    Restricted cash        24,500           -        24,500     (24,500)
    Accounts receivable   (65,857)     72,810      (172,218)     (65,816)
    Inventories           (17,039)     (7,477)       83,548       95,850
    Prepaid expenses
     and other assets      (1,362)     19,037         7,559       61,847
    Accounts payable       38,281     (11,882)      172,062       (6,004)
    Accrued liabilities
     and other            (82,687)     10,306       (13,628)     (23,693)
    Accrued employee
     compensation          36,123       7,664        35,149       17,659
    Income taxes
     payable              (33,988)     (5,914)      (29,060)        (100)
    Deferred income        29,246       2,715        27,538       (4,700)
      Net cash provided
       by operating
       activities         203,534     258,465       530,396      571,542
Cash flows from investing
 activities:
  Purchases of
   investments           (426,998)          -      (426,998)     (10,172)
  Sales and maturities
   of short-term and
   long-term
   investments             10,268       5,388        10,318       29,181
  Purchases of
   technology
   licenses                     -      (1,400)      (12,550)      (2,650)
  Purchases of property
   and equipment           (7,629)    (12,780)      (14,808)     (59,312)
      Net cash used in
       investing
       activities        (424,359)     (8,792)     (444,038)     (42,953)
Cash flows from
 financing
 activities:
  Proceeds from the
   issuance of common
   shares                  13,728      12,797        34,749       80,453
  Principal payments
   on capital
   lease and debt
   obligations               (451)   (101,634)       (1,326)    (205,039)
  Excess tax benefits
   from stock-based
   compensation               136        (138)          205          356
      Net cash
       provided by
       (used in)
       financing
       activities          13,413     (88,975)       33,628     (124,230)
Net increase in cash
 and cash equivalents    (207,412)    160,698       119,986      404,359
Cash and cash
 equivalents at
 beginning of period    1,254,807     859,309       927,409      615,648
Cash and cash
 equivalents at
 end of period         $1,047,395  $1,020,007    $1,047,395   $1,020,007

SOURCE Marvell Technology Group Ltd.

Jeff Palmer, Investor Relations, +1-408-222-8373, jpalmer@marvell.com, or
Tom Hayes, Corporate Communications, +1-408-222-2815, tom@marvell.com, both of Marvell Technology Group Ltd.