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 Silicon Motion Technology (SIMO -1.91%) have gotten crushed today, down by 19% at the low, after the company reported third-quarter earnings.
So what: Revenue in the third quarter added up to $77.1 million. Adjusted net income came out to $0.54 per share. Both of those figures topped consensus estimates, which were calling for $74.4 million up top and $0.46 per share down below. The third quarter was strong thanks to better-than-expected LTE transceiver orders from Samsung. The real kicker was the guidance.
Now what: The company said it was originally expecting these sales in the fourth quarter, but they've been shifted forward to the third quarter. As a result, fourth quarter revenue is expected to decline between 3% and 9% sequentially, with non-GAAP gross margin of 44% to 46%. It seems like the expected revenue drop is causing the sell-off, but if it were based solely on sales being shifted -- and not lost -- this would be a case of overreaction. Full-year revenue should grow between 25% and 27%.
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