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Starboard Discloses 7% Stake in Marvell Technology

February 3, 2016

Key Speakers At The Hedge Funds SummitKey Speakers At The Hedge Funds Summit
Jeffrey Smith chief executive officer and chief investment officer of Starboard Value.Photograph by Michael Nagle — Bloomberg via Getty Images

Activist investor Starboard Value LP disclosed a stake of about 7 percent in Marvell Technology Group on Wednesday, saying the chipmaker’s shares were “undervalued.”

Marvell shares were up 4.6 percent at $9.07 in premarket trading. The company, which is embroiled in accounting and legal troubles, had lost nearly 40 percent of its value in 2015.

Starboard, run by Jeffrey Smith, wants Marvell to cut costs and exit its mobile-wireless business, according to a person familiar with the matter.

Marvell had said in September it would cut about 17 percent of its global workforce as it trims its mobile business to focus on automotive technologies and Internet of Things.

The chipmaker said in the same month that it was investigating its accounting practices related to revenue-recognition issues in the second quarter.

Analysts had said Marvell’s woes may have kept away potential suitors at a time of record consolidation in the semiconductor sector.

Starboard said it would retain Rick Hill, Oleg Khaykin and Jeff McCreary – executives from the semiconductor industry – as advisers in connection with its investment in the company.

The activist hedge fund has invested in several semiconductor companies, including TriQuint Semiconductor and Integrated Silicon Solution Inc.

The Wall Street Journal first reported the news of the stake on Tuesday, citing sources.