Shares of Tower Semiconductor (NASDAQ:TSEM), a subsidiary of Israeli company TowerJazz, fell 21.2% today after the specialty foundry leader announced disappointing third-quarter 2018 results.
More specifically, the parent company saw revenue decline 9% year over year to $323 million, which translates to a net profit of $34 million, or $0.33 per diluted share, down from $0.54 per share in the same year-ago period. Analysts, on average, were anticipating earnings of $0.40 per share on revenue of $335 million.
TowerJazz CEO Russell Ellwanger noted the company has opted to focus on profitability by not using its capacity of lower-margin opportunities.
"This has had a greater than expected revenue impact in 2018 while building the higher value mix with some high-end replacements not having met customer forecasts," Ellwanger added. "The present overall market softness has had a recent notable impact across our business units, with a fourth quarter revenue roll-up lower than previous expectations."
Looking to the fourth quarter, TowerJazz expects revenue arriving at roughly $340 million, plus or minus 5% -- well below the $364 million most investors were modeling. To be fair, the company also anticipates margins will increase to end the year. But given its top-line shortfall in the meantime and broader industry weakness, it's no surprise to see the stock falling hard today.