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 semiconductor equipment maker Kulicke & Soffa (NASDAQ: KLIC ) fell as much as 12% after the company reported its first-quarter earnings results.
So what: For the quarter, Kulicke & Soffa reported a 5% decline in revenue to $114 million and an adjusted profit of $0.07, excluding one-time items. Both figures were modestly ahead of the $107.2 million in revenue and $0.06 that Wall Street had been expecting. The wheels fell off the bus, however, when the company offered revenue guidance for the second-quarter to the tune of $90 million to $100 million, well below the $127 million the Street expected. Kulicke's management noted that this is typically their slow time of the year and visibility should improve after the Chinese New Year.
Now what: While everyone else is choosing to run away, I'd choose this moment to get excited. Kulicke & Soffa is in a cyclical industry, and with cyclical industries comes the normal ebb-and-flow of the tech cycle. Although the company's guidance may not be indicative of it, Intel's capital expenditures forecast of $13 billion this year, which was $2 billion higher than in 2012, could be the signal of higher spending that management was waiting for. Kulicke & Soffa regularly produces positive free cash flow and $494.2 million in cash ($6.45 per share) with no debt. If anything, I'd use a day like today to dig deeper into Kulicke & Soffa.
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