Why Super Micro Computer 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 Super Micro Computer (NASDAQ: SMCI  ) fell by more than 10% during intraday trading Wednesday, after the company reported mixed quarterly earnings results. However, shares recovered some of their early morning losses to close down around 5.5%.

So what: Quarterly net sales rose 14.2% year over year to $309 million, which translated to adjusted earnings of $0.22 per diluted share. For reference, analysts on average were expecting the company to achieve those $0.22 per share in non-GAAP earnings on lower revenue of $307.23 million.

Going forward, Super Micro also said it expects fiscal second-quarter net sales of $320 million to $350 million, with non-GAAP earnings of $0.25 to $0.31 per diluted share. Both ranges came in well above analysts' consensus estimates.

Now what: All told, the quarter certainly wasn't all that bad, especially considering management also pointed out that it's currently sitting in a "transition period ahead of new technology."

Still, I suppose I can't blame investors for wanting to take some profits off the table -- even after today's pullback, shares still trade around 28 times last year's earnings and have risen by around 35% over the past six months alone. That said, the stock is also trading for only 9.5 times next year's estimated earnings, so long-term investors who don't mind holding could still be handsomely rewarded for their patience.

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