Please ensure Javascript is enabled for purposes of website accessibility

Why MACOM Technology Solutions Holdings Inc. Shares Dropped Today

By Bradley Seth McNew - Apr 26, 2017 at 2:09PM

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

MACOM reported a very wide loss for its fiscal second quarter, but its long-term bet still looks like a good one.

What happened

Shares of MACOM Technology Solutions Holdings Inc. (MTSI -3.06%), the maker of semiconductors and other technologies, were down as much as 14% in early-morning trading today before regaining some ground midday after the company reported its fiscal Q2 earnings. 

So what

For its fiscal second quarter ended March 31, MACOM reported sales of $186.1 million, up nearly 40% year over year and ahead of expectations. However, the company reported a loss far wider than in the same quarter last year at $130.1 million, or $2.14 per share. Adjusted for one-time events, including its January acquisition of AppliedMicro, earnings look much better at a positive $0.63 per share -- a 37% jump from the same period last year. 

A semiconductor chip with the MACOM label on it.

Image source: Macom Technology Solutions Holdings Inc.

Now what

The AppliedMicro acquisition was a big bet for MACOM as it seeks to grow its abilities and footprint in the cloud computing solutions industry. It should be a surprise to no one that the big growth driver for anyone in this space right now is the switch to cloud computing, and during the earnings call, MACOM CEO John Croteau related this industry switch and its effect on MACOM's growth potential when he said, "Personally, I haven't seen such a breakout in our part of the industry since the advent of digital handsets and smartphones decades ago. It's shaping up, yes, to be that big."

MACOM expects to earn between $0.67 and $0.71 for the current fiscal Q3 ending in July, from revenue in the range of $194 million to $198 million -- both of which would be continued strong growth over the prior year. 

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

MACOM Technology Solutions Holdings, Inc. Stock Quote
MACOM Technology Solutions Holdings, Inc.
MTSI
$45.85 (-3.06%) $-1.45

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

Motley Fool Returns

Motley Fool Stock Advisor

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

Stock Advisor Returns
317%
 
S&P 500 Returns
112%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/30/2022.

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.