Why Lattice Semiconductor Stock Dropped, Then Recovered Today

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 Lattice Semiconductor Corporation (NASDAQ: LSCC  ) fell by as much as 18% Friday, then recovered to close down just 4% after the company released solid second-quarter results and disappointing guidance.

So what: Quarterly revenue rose 17.2% year over year, to $99.3 million, which translated to net income that more than doubled to $11.8 million, or $0.10 per diluted share. Analysts, on average, were modeling earnings of $0.09 per share on sales of $98.6 million.

However -- and this explains the sharp early-morning drop -- Lattice Semiconductor also expects current-quarter revenue to fall 8% to 12% sequentially, or to a range of $87.4 million to $91.4 million. By comparison, analysts were looking for significantly higher third-quarter revenue of $98.5 million.

Now what: But to appease investors and explain the guidance shortfall, Lattice CEO Darin Billerbeck pointed to "softness in our communication business in Q3 as the few of our larger OEMs work through what we believe is inventory correction." With this in mind, the company does expect to see customer volume increase in the fourth quarter, thanks both to new model launches by those large OEMs, as well as new business from Lattice's China customers.

In the end, and considering next quarter's expected results should only be a temporary hiccup, I think patient, long-term investors could do well to consider using today's drop to add to or open a small position.

Risk free for 30 days: The Motley Fool's flagship service
Tom and David Gardner founded The Motley Fool more than 20 years ago with the goal of helping the world invest... better. Their flagship service, Stock Advisor, has helped thousands of investors take control of their financial lives and beat the market. Click here to sign up today.


Read/Post Comments (0) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 3045344, ~/Articles/ArticleHandler.aspx, 9/17/2014 5:35:10 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement