Why China Digital TV Holding Co., Ltd. Shares Plunged Today

What: Shares of China Digital TV Holding Co., Ltd. (NYSE: STV  )  fell more than 10% Wednesday after the company turned in solid fourth-quarter results.

So what: Quarterly revenue rose 11.9% year over year to $25.9 million. That translated to earnings of $0.17 per diluted share, which was in line with analysts' expectations.

As a result, full-year 2013 revenue and earnings per share came in at $87.2 million and $0.41, respectively. Analysts, on average, were looking for 2013 earnings of just $0.30 per share on sales of $82.4 million.

However, China Digital TV expects current quarter revenue to fall to a range of $16.4 million to $17.7 million, the midpoint of which represents a 14.3% drop from last year's first quarter.

Now what: That could make it difficult for China Digital TV to live up to the expectations of analysts, who went into the report modeling 2014 sales of $86.4 million.

Even though the stock might look like a bargain trading at just 7.4 times last year's earnings, I can't blame investors for stepping back as long as China Digital TV's top-line appears to be moving in the wrong direction. For now, that's why I'm perfectly happy keeping an eye on China Digital TV's progress from the sidelines.

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  • Report this Comment On March 03, 2014, at 3:40 AM, agw1974 wrote:

    This article was informative,but fails to see the big picture. STV has roughly 70% of the tv/digital market in China and is poised to take advanatage of a 2015 deadline for analog to digital transition as well the management is very credible, so the information is giving a very safe message, but lacks the intrinsic value the stock actually possess.

  • Report this Comment On May 22, 2014, at 9:11 PM, Zaneyjaney wrote:

    Hi Steve,

    It looks like most Fools are not following STV. That's too bad. SA's summary of STV says there's 0.0 dividend. However, approximately once a year, STV sends their stockholders a huge chunk of money in a one-time dividend. So far, in less than 3 years, I've gotten half of my investment back in one-time dividends to reinvest as I please. That beats out any other announced dividend and most market pops! I am glad I hung in there all this time when things weren't looking so good for STV. Now they're in the green on my scorecard, and that's without the divvy chunks thrown in!

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