What happened

Shares of semiconductor company Silicon Laboratories (NASDAQ:SLAB) fell 13.3% through noon EST on Wednesday after the company reported fiscal Q4 and full-year earnings that fell short of analyst expectations.  

Adjusted quarterly EPS of $0.84 on sales of $219.4 million missed Wall Street's projections for an $0.89 profit on sales of $222.1 million.  

Short circuit on a semiconductor chip

Image source: Getty Images.

So what

The results were mixed. On the one hand, while quarterly sales missed expectations, they were within the guidance range, management said, and up about 2% year over year. Profits, on the other hand, declined sharply from last year. When calculated according to generally accepted accounting principles (GAAP), Silicon Labs earned $0.22 per share in the final quarter of the year, down 37% from Q4 2018.

Discussing the results, management described the macroenvironment for semiconductors as challenging. Nevertheless, the company noted that infrastructure sales climbed 5% year over year in Q4, and sales attributed to the Internet of Things rose 7%, which doesn't sound so awful.

Now what

Looking ahead, however, management did itself no favors. New guidance for Q1 2020 sales calls for revenue to fall somewhere between $209 million and $219 million. At the midpoint, that's hardly better than the $213.6 million in sales that Wall Street was already forecasting. Worse, management says its GAAP results could show a loss (with GAAP earnings to range from a loss of $0.03 per share to a gain of $0.07), while non-GAAP (adjusted) profits for the quarter will range from only $0.57 to perhaps $0.67.  

At the midpoint, that's $0.62 per share -- but Wall Street wants to see $0.65 per share.

In other words, after reporting one earnings miss in Q4, Silicon Labs looks set to report another in Q1.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.