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 Chinese communications company Telestone Technologies (Nasdaq: TSTC) fell as much as 16% after the company announced the completion of a new share offering.

So what: The drop today is a no-brainer. Telestone sold 1.67 million new shares, diluting current shareholders by roughly 16%. Worse still, the shares were sold at $12 each despite the fact that yesterday's closing price was north of $14.

Now what: One might wonder why a solidly profitable company like Telestone would need to sell new shares at all, let alone do it at a significant discount to the market price. Well, even though the company has reported nearly $18 million in net profit over the past 12 months, the company has had trouble turning any of its profits into cash. Over the five years ended in 2009, growth in accounts receivable sucked up all of the company's profits, and it managed to burn through $3.3 million in cash in its operations. With ongoing concerns about small Chinese companies that entered the U.S. markets through reverse mergers, Telestone is one that I'd skip over.

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