Entropic Communications Plunged: What You Need to Know

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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of media networking specialist Entropic Communications (Nasdaq: ENTR  ) fell more than 11% below last night's closing price after an unexciting earnings report.

So what: Entropic beat both the analyst revenue target and the earnings target. In addition, next-quarter guidance on both counts was stronger than the analyst forecasts.

Now what: It doesn't seem fair to punish Entropic so harshly, especially with a strong outlook on the near future. The company has little competition in its core operations, which is to make networking chips for MoCA-compliant media networks such as multi-room DVR systems marketed by Verizon (NYSE: VZ  ) under the FiOS brand. Digital media is the future, and Entropic looks likely to play an important part in that market evolution.

Interested in more info on Entropic Communications? Add it to your watchlist by clicking here.

Editor's note: This article has been updated to reflect that Entropic did not miss analyst revenue estimates. The Fool regrets the error.  

Fool contributor Anders Bylund holds no position in any of the companies discussed here. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool is investors writing for investors.

Read/Post Comments (4) | Recommend This Article (1)

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  • Report this Comment On October 28, 2010, at 4:57 PM, dkoran wrote:

    The revenue guidance was raised back in Sept 2010 from appx.51 mm to the 60-61 mm range. I believe entr reported revenue of 61.3mm, thus this was not a miss. This might explain the irrational selloff today as the uninformed investor paniced. Your article needs to reflect this important information .

  • Report this Comment On October 28, 2010, at 6:27 PM, TMFZahrim wrote:

    dkoran, I'm well aware of the raised guidance but never compared the results against them in this article. The "miss" is relative to the average analyst estimate, not company guidance. Hope that helps.


  • Report this Comment On October 28, 2010, at 7:06 PM, KaBiFf2 wrote:

    Average Analyst Revenue Estimates for Q3 2010

    60.48 Million

    Company Reported

    61.3 Million


    Average Analyst Revenue Estimates for Q4 2010

    63.33 Million

    Company Guided Higher

    Expects to earn 68 Million

  • Report this Comment On October 28, 2010, at 10:00 PM, dkoran wrote:

    As I said previously, ENTR did not miss as article stated.

    60.48 million estimate /61.3 million actual.Not sure why market sold off the stock today even if investors interpreted a small missed revenue # . Company guided higher next quarter. Amazes me how ANALyst know more about a company than the management does.

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