Why Linear Technology, ADTRAN, and ASML Holding Tumbled Today

The stock market soared Wednesday as hopes for a continued expansion appeared more attainable, but these stocks missed out on the celebration. Find out why.

Apr 16, 2014 at 8:35PM

The stock market has been extremely volatile lately, with alternating bouts of euphoria and despair whipsawing major-market benchmarks. On Wednesday, bullish investors won the battle, as the Dow and S&P both posted gains of about 1% on the heels of a generally positive start to earnings season. Yet for investors in Linear Technology (NASDAQ:LLTC), ADTRAN (NASDAQ:ADTN), and ASML Holding (NASDAQ:ASML), the news wasn't nearly as good, and the stocks were among the worst performers on an upbeat day for the market as a whole.

Linear Technology fell more than 4% after the maker of analog semiconductor chips issued its fiscal third-quarter earnings report last night. Even though Linear Technology's revenues rose 11% from the year-ago quarter, investors had hoped for slightly better sales growth, and guidance for revenue for the current quarter fell in a range whose midpoint was somewhat below expectations as well. The key to Linear Technology's future results could be whether the automotive and communications sectors do well, as the chipmaker relies on those markets in particular for much of its sales. Even though an improving economy has lifted prospects for companies in the chip sector, competition could pose threats to Linear Technology's long-term growth.


Source: ADTRAN.

ADTRAN dropped 9% following its own earnings report last night, in which the communications-equipment manufacturer disappointed investors with just a 2.8% rise in revenue. Even though ADTRAN saw a 56% jump in international sales, poor results domestically held back the company's overall sales figures, and even better-than-expected earnings that resulted in part from rising gross margins worldwide weren't enough to bolster investor confidence in ADTRAN. Moreover, with guidance suggesting that those margin levels could fall in the second quarter, shareholders are nervous about whether ADTRAN's results could point to further difficulties for telecom equipment makers more broadly.

Elsewhere in the chip world, ASML Holding declined nearly 3.5% after beating earnings expectations for the first quarter but giving poor revenue guidance for the current quarter. Sales for the maker of semiconductor equipment soared from year-ago levels, as a rebound in the memory market drove demand. But ASML Holding said that second-quarter sales would be hurt, cutting its overall guidance for the first half of 2014. The news sent other stocks in the semiconductor-equipment sector falling as well, and given how technology has been in the spotlight lately, declines could point to further troubles ahead in the sector.

The biggest thing to come out of Silicon Valley in years
If you thought the iPod, the iPhone, and the iPad were amazing, just wait until you see this. One hundred top engineers are busy building one in a secret lab. And an ABI Research report predicts 485 million of them could be sold over the next decade. But you can invest in it right now, for a lower price than you might think. Click here to get the full story in this eye-opening new report.

Dan Caplinger has no position in any stocks mentioned. The Motley Fool recommends Linear Technology. 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