Why National Instruments Shares Sank

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 scientific tools manufacturer National Instruments (NASDAQ: NATI  ) sank 13% today after its quarterly results and guidance missed Wall Street expectations.  

So what: First-quarter profit managed to top estimates, but a wide miss on the top line -- revenue of just $265.41 million versus the consensus of $287.79 -- coupled with downbeat guidance, is triggering concerns over slowing growth. Analysts are particularly concerned that lower quality revenue and overspending will likely lead to shrinking gross margins, giving momentum investors little reason to stick around.  

Now what: Management now sees second-quarter adjusted EPS of $0.16-$0.28 on revenue of $290 million-$320 million, versus Wall Street's view of $0.22 and $301 million. "While we were very pleased with our revenue execution in Q1, we are very disappointed in our profit performance," said COO and CFO Alex Davern. "We are taking corrective actions to control our spending through the rest of 2013." More importantly, with the stock now off about 20% from its 52-week highs, current buyers might be able to gain from that improvement.  

Interested in more info National Instruments? Add it to your watchlist.


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