Why LTX-Credence Shares Plunged

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 LTX-Credence (NASDAQ: XCRA  ) dropped more than 12% after the provider of automatic semiconductor test equipment posted disappointing fourth-quarter results and forward earnings guidance.

So what: Net sales for the quarter came in at $37.52 million, missing analyst's average estimates which called for revenue of 38.09 million. Meanwhile, the company's adjusted loss per share came in at $0.07, in line with expectations.

Now what: LTX-Credence president and CEO Dave Tacelli stated, "While there are specific market segments showing increasing business levels, a broad based recovery in our industry has yet to materialize. However, if the trends we see in certain market segments continue, we expect calendar year 2014 to be a growth year for the industry and our test business."

As a result, the company expects fiscal first-quarter 2014 net sales to be in the range of $31 million to $35 million, with a non-GAAP net loss ranging from $0.14 to $0.09 per share. For reference, analysts were looking for significantly better first-quarter numbers, with earnings of $0.05 per share on sales of $45.69 million.

LTX-Credence ended the quarter with no debt and around $124 million in cash -- or over 60% of its entire market capitalization -- so it looks like it has the assets to weather this storm. However, as long as there's no end in sight to its current losses, don't expect the stock to bounce from 52-week-lows.

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