UPDATE 1-Goldman downgrades Marvell as tablets dent HDD

* Expects a gradual erosion in the long-term HDD market

* Cites RIM’s lossing market share

Dec 3 (BestGrowthStock) – Goldman Sachs downgraded Marvell
Technology Group (MRVL.O: ) a notch to ‘neutral’ citing the
company’s limited exposure to the growing tablet market and
signs of slowing growth at Research in Motion (RIM.TO.: )

Santa Clara, California-based Marvell draws majority of its
revenue through sales of its Hard Disk Drive (HDD) controllers
and also sells chips used in smartphones including the
Blackberry Torch.

Analyst James Schneider, who has a $22 target price on the
stock warned of a the growing adoption of tablets over netbooks
and laptops as a possible catalyst for cannibalisation of HDD
sales.

“Hard drive unit growth is likely to slow substantially in
2011… We expect a gradual erosion in the long-term HDD market
unit growth rate given the secular threat posed by alternative
storage solutions.”

Tablets and other small-form factor computing devices are
heralding the switch to flash memory and Solid State Drives
(SSDs) from the traditional HDDs because of their inherent
speed and size advantage.

The wireless and mobile business is likely to slow down
with RIM subscribers falling and uncertainty over China
Mobile’s (0941.HK: ) ‘Ophone’ opportunity — for which Marvell is
a key supplier, Schneider said.

Marvell last month gave fourth-quarter outlook that lagged
estimates on account of seasonality in its wireless and mobile
business. [ID:nSGE6AH003]

The company’s shares, which have gained 6 percent since the
start of the Nov-January quarter, closed at $20.46 on Thursday
on Nasdaq. They were down 3 percent at $19.46 in pre-market
trading.

(Reporting by Himank Sharma in Bangalore)

UPDATE 1-Goldman downgrades Marvell as tablets dent HDD