What happened

Shares of semiconductor company Inphi (NASDAQ:IPHI) fell as much as 18.6% on Wednesday morning after the company reported its first-quarter results. Shares were down 16.6% at 11:50 a.m. EDT.

So what

For Q1, Inphi reported revenue and non-GAAP revenue of $94 million and EPS of $0.44, up from revenue of $54 million and non-GAAP EPS of $0.26 in the year-ago quarter. While the results were in line with analysts' expectations, the company missed the mark on one key metric: its guidance for the second quarter.

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Image source: Getty Images.

For Q2, Inphi management said it expects revenue in the range of $80 million to $88 million, down 6% to 14% sequentially. On average, analysts had forecast Inphi's Q2 revenue would be about $96 million, up slightly on a sequential basis.

Management said its expects Q2 revenue will be "adversely impacted" primarily by inventory accumulation in its China long-haul and metro markets, which Inphi notes represent 40% of worldwide optical communications demand.

Now what

Beyond Q2, management said it is confident in the company's growth potential, even in its China long-haul and metro markets. Product positioning with its customers and growing market share will help growth continue, management noted.

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