Please ensure Javascript is enabled for purposes of website accessibility

Why Shares of Immersion Corp. Slumped Today

By Timothy Green - Mar 3, 2017 at 11:27AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

A weak fourth quarter and a disappointing outlook sent investors to the exits.

What happened

Shares of touch feedback technology developer Immersion Corp. (IMMR 0.18%) tumbled on Friday after the company fell well short of analyst estimates when it reported its fourth-quarter results. Immersion also provided disappointing guidance for 2017. At 11:30 a.m. EST, the stock was down about 18.5%.

So what

Immersion reported fourth-quarter revenue of $9.3 million, down 44% year over year and more than $1 million below the average analyst estimate. Non-GAAP EPS came in at a loss of $0.27, down from a profit of $0.07 in the prior-year period and $0.09 lower than analysts expected. On a GAAP basis, Immersion posted a net loss of $38.1 million, reflecting a non-cash charge related to the company's deferred tax assets.

A person using touch feedback on a phone.

Image source: Immersion Corp.

Immersion expects to generate between $38 million and $42 million of revenue in 2017, down from $57.1 million in 2016. Excluding recognition of wind-down rights from Samsung, which added $19 million of revenue in 2016, revenue will be flat to up 11%. Non-GAAP EPS is expected to be a loss of between $0.76 and $1.05 for the full year.

Now what

CEO Vic Viegas tried to explain the company's weak guidance: "In the near-term, we recognize that there will be some trade-offs with regards to financial performance as we vigorously defend our IP. In addition to normal considerations, our guidance for 2017 takes into account the ongoing litigation with Apple and the current unlicensed status of Samsung."

Despite these issues, Viegas sees a bright future for Immersion, saying, "Looking ahead, we are confident that our innovative solutions and IP increasingly will be recognized as a 'must have' by existing and new customers, leading to measurable value creation and growth prospects in 2017 and beyond."

With Immersion calling for a steep revenue decline and big losses in 2017, it should be no surprise that investors are selling off the stock.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Immersion Corporation Stock Quote
Immersion Corporation
IMMR
$5.63 (0.18%) $0.01

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
336%
 
S&P 500 Returns
115%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/26/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.