Shares of chipmaker Marvell plummeted on Friday after the company said it was unable to file its quarterly earnings results on time, but that it expected to post a whopping $382.4m net loss.
In a filing with the US Securities and Exchange Commission, Marvell said its earnings report would be late due to an ongoing internal investigation into its finances.
"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," the company said – whatever you make of that.
Digging in, it seems Marvell's board of directors is concerned that between 7 and 8 per cent of the revenue the company recognized during the second quarter of its fiscal 2016, which ended on August 1, might not actually exist.
The discrepancy, Marvell said, is "indicative of softening demand" for certain of its 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, [Marvell] saw weaker than expected demand for [hard disk drive] products as the overall total available market declined," the company said.
The board is reportedly also looking into "the effectiveness of internal control over financial reporting" at Marvell. As a result, it declined to provide any guidance for the upcoming third quarter.
This is only the latest setback for Marvell, which is still reeling from a 2012 court ruling that its chips for disk drives infringed on patents owned by Carnegie Mellon University. It managed to get the record-setting $1.5bn judgment against it reduced to $278.4m in August, but that still amounts to 50 cents per infringing chip.
Marvell said its internal audit had revealed "no material issues" so far and that it doesn't expect any to appear by the time the investigation concludes. It added that it will announce a conference call to discuss its final Q2 results once the investigators' final report is in.
Investors weren't impressed, though, and Marvell's share price came crashing down by more than 16 per cent on the news and continued its decline in after-hours trading. ®