Why Xilinx, Inc. Stock Got Rocked

Is this meaningful? Or just another movement?

Jul 23, 2014 at 1:25PM

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 chipmaker Xilinx (NASDAQ:XLNX) plummeted 15% today after its quarterly results and outlook disappointed Wall Street.

So what: Xilinx's Q1 EPS of $0.62 managed to edge estimates, but a wide miss on the top line -- revenue of $612.6 million versus the consensus of $631 million -- coupled with downbeat guidance, reinforces concerns about softening demand going forward. While management's cost reduction efforts resulted in a year-over-year improvement in both gross and operating margin, analysts are worried that unfavorable wireless infrastructure trends will continue to dampen Xilinx's growth prospects.

Now what: Management now expects Q2 revenue to be flat to down 4% sequentially, versus the average analyst estimate of 2.2% growth. "June quarter revenues were affected by weaker than anticipated sales from our defense and wireless businesses," said President and CEO Moshe Gavrielov. "Looking ahead to the second half of our fiscal year, I believe Xilinx is positioned to benefit from a recovery in wireless and defense programs as well as improved business conditions in wired communications and industrial applications." When you couple the wireless headwinds facing Xilinx with its steepish PEG above 1.5, however, I'd hold out for an even wider margin of safety before buying into that turnaround talk. 

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4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

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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. 

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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."

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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.

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