Marvell Technology Group President and CEO Matt Murphy told CNBC that he wasn’t expecting the market to react so positively to Marvell’s $6 billion deal to buy fellow chipmaker Cavium.
“We’re actually pleasantly surprised,” Murphy told “Mad Money” host Jim Cramer on Tuesday. “The reaction we’ve gotten over the last few days as I’ve met with investors is they love the fact that you’re getting a pure play infrastructure, cloud-levered, [internet-of-things]-levered company that really takes care of all the interconnections within the cloud and to the edge.”
In a fairly unusual move for an acquirer’s stock, shares of Marvell surged on news of the deal, closing up 7.8 percent on Tuesday. Shares of Cavium closed up nearly 4 percent.
Murphy, who took the helm of Marvell in July 2016, classified the move as part of a larger restructuring the semiconductor company is doing under his leadership.
Upon joining the chipmaker, Murphy said he set up three main objectives: spruce up the financials, build a management team and re-focus the company as a whole.
“The thing about Marvell is it’s an iconic company. It’s got great technology, great bones and great engineering and products,” Murphy told Cramer. “We re-focused fundamentally on storage, networking, cloud and infrastructure as the key drivers for our company’s future, and that’s now set us up over the last year to grow our top line, make a ton of progress with customers, and then enable us, with the balance sheet we’ve got, to actually go off and combine with Cavium.”
Combining with rival Cavium will help diversify Marvell’s client portfolio and business, reducing the hard drive business, which used to garner 40 percent of Marvell’s sales, to only 25 percent of the company, the CEO said.
“Of that 25 percent, a good portion of that is actually growing within hard drives. All the drives that go into the data center or enterprise, the big-capacity drives, the near-line drives, that’s a growing segment of the hard drive market,” Murphy said.
Better yet, the CEO said the combination will create a leading player in “silicon, software and solutions for the cloud,” presented to the market as “the industrial internet of things.”
“We think that this combination is fantastic on a number of levels,” Murphy told Cramer. “Once the data gets onto the internet, that goes all through Marvell and Cavium technology.”
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Source: Tech CNBC
Marvell CEO on creating an internet of things infrastructure 'pure play' with Cavium acquisition