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.

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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.

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