Why Magnachip Semiconductor Corp. Shares Temporarily Plunged Today

Is Magnachip's drop meaningful? Or just another movement?

Mar 12, 2014 at 8:31PM

What: Shares of Magnachip Semiconductor Corp. (NYSE:MX) fell more than 12% early Wednesday, then recovered to close down around 2.8% after the company announced "non-reliance on previously issued financial statements."

So what: Specifically, MagnaChip says its audit committee determined it will need to restate its financial statements for the the first, second, and third quarters of 2013 and 2012, and for the years ending 2012 and 2011. To explain the flub, MagnaChip stated revenue on certain transactions was incorrectly recognized when products were shipped to a distributor. Instead, revenue should have been recognized when the distributor shipped product to the customer.

Separately, MagnaChip announced it has appointed Jonathan W. Kim as its new chief accounting officer, effective immediately.

Now what: The update comes more than six weeks after MagnaChip postponed its fourth quarter earnings release and conference call -- both were previously scheduled for Jan. 28. The stock has already fallen more than 20% since then, which likely explains why it was able to recoup its early losses as today's trading wore on.

Investors can also take at least some comfort knowing the restatement isn't expected to change previously reported cash and debt balances as of the end of each period in question. It will, however, extend the time required going forward for revenue recognition from certain transactions with MagnaChip's distributors. Meanwhile, revenue generated from MagnaChip's non-distributor customers will not be affected.

Though the stock might look cheap trading around 0.6 times sales and 5.6 times this year's expected earnings, I'm still not particularly compelled to buy in today. Rather, before making any long-term investing decisions, I'm perfectly happy waiting until the dust settles, then digging in after MagnaChip's restatements are complete.

These nine stocks are as reliable as they come
If MagnaChip has shaken your confidence, why not consider putting your money to work in something a little more solid?

In fact, one of the dirty secrets that few finance professionals will openly admit is that dividend stocks as a group handily outperform their non-dividend-paying brethren. However, knowing this is only half the battle. The other half is identifying which dividend stocks in particular are the best. With this in mind, our top analysts put together a free list of nine high-yielding stocks that should be in every income investor's portfolio. To learn the identity of these stocks instantly and for free, all you have to do is click here now.

Steve Symington and The Motley Fool have no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information

Compare Brokers