What happened

Shares of Xilinx (NASDAQ:XLNX) fell as much as 10.2% on Wednesday morning, following a mixed third-quarter report on Tuesday evening.

So what

The maker of programmable logic devices saw third-quarter sales falling 10% year over year to $723 million, while adjusted earnings declined 26% to $0.68 per share. The Street consensus was calling for earnings near $0.59 per share on revenue in the neighborhood of $731 million. The company also set a low bar for fourth-quarter revenue, aiming for roughly $765 million, while the analyst consensus had pointed to approximately $825 million.

Two hands in front of several uncut semiconductor wafers, one giving a thumbs-up sign and the other with a thumbs-down.

Image source: Getty Images.

Now what

Xilinx pinned the soft revenue on "global trade headwinds" and slowdowns in both wired and wireless network deployments. The company is implementing several cost-cutting measures, including a 7% headcount reduction and stricter limits on discretionary expenses. 5G wireless rollouts have been boosting Xilinx's sales in recent quarters and are still seen as a long-term upside, but management said that there's a lull right now between the first and second major waves of 5G installations in key markets like China and South Korea.

"The unprecedented change in US-China relations in trade clearly has an impact on the industry and specifically our business, and at a time that's really unfortunate right at the beginning of deployment of 5G," CEO Victor Peng said on the earnings call. "It is important to remember we're still in the relatively early innings on 5G and it started out much stronger and earlier than people predicted. Now we're having a soft spot, but we have the right kind of engagements with top OEMs and there's still many more innings to come."

Several analyst firms lowered their target prices for Xilinx based on the weaker revenue and rather extreme cost-cutting measures, but many of these target cuts remain paired to "buy" recommendations. This price drop looks like a solid buy-in window for the long haul, and Xilinx shares are still trading at a lofty 27 times forward earnings estimates, or 38 times trailing free cash flows. Don't be fooled by the lower sales and earnings in this particular report -- Xilinx is still a promising growth investment for patient buyers.