Why Mellanox Technologies Ltd. Shares Imploded

Is this meaningful? Or just another movement?

Apr 25, 2014 at 2:45PM

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 Mellanox Technologies (NASDAQ:MLNX) have lost 15% of their value today after the company reported disappointing first-quarter earnings following yesterday's closing bell.

So what: Mellanox's first-quarter revenue was up 19% year over year to $98.7 million, and its earnings came in at $0.10 per share, equal to last year's result. Both results were weaker than Wall Street had expected -- analysts were looking for $102.9 million in revenue and $0.12 in EPS. In GAAP terms, Mellanox lost $0.26 per share, worse than the year-ago quarter's $0.20 loss per share.

The company now expects second-quarter revenue to range from $100 million to $105 million, and for non-GAAP gross margins to range from 68% to 69%, with operating expenses to rise 4% to 6% from the first quarter. This projection implies that the company will arrive at roughly breakeven, or possibly report an adjusted loss per share, as this quarter's non-GAAP operating margin was only 5%. Both figures are substantially worse than Wall Street's expectations, which called for revenue of $109.6 million and for $0.18 in EPS.

Now what: Mellanox isn't cheap on any metric -- it's currently reporting a loss and its free cash flow is barely there at all, despite a billion-dollar-plus market cap. Investors have already suffered a huge loss over the past year, and the company doesn't appear poised for a surge on either top or bottom lines just yet. I'd watch from the sidelines until there's better evidence of improvement.

3 stocks poised to be multi-baggers
The one sure way to get wealthy is to invest in a groundbreaking company that goes on to dominate a multibillion-dollar industry. Our analysts have found multi-bagger stocks time and again. And now they think they've done it again with three stock picks that they believe could generate the same type of phenomenal returns. They've revealed these picks in a new free report that you can download instantly by clicking here now.

Alex Planes has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not 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.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at www.fool.com/podcasts.

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to www.fool.com/podcasts, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.

 


Compare Brokers