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Why Silicon Labs Shares Fell 15% Last Month

By Anders Bylund - Feb 7, 2020 at 3:01PM

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The microchip designer reported unexpected slowdowns in a couple of key markets in the fourth quarter.

What happened

Shares of Silicon Labs (SLAB -2.56%) fell 15.2% in January 2020, according to data from S&P Global Market Intelligence. The designer of embedded semiconductors posted disappointing fourth-quarter results near the end of the month, driving share prices 13% lower in a single day.

So what

Adjusted fourth-quarter earnings fell 8% year over year, landing at $0.84 per share. Revenue rose by 2% to $219 million. Your average analyst had been looking for earnings near $0.89 per share on sales of roughly $222 million. Silicon Labs saw slow orders from the automotive and industrial Internet of Things markets along with exaggerated seasonal swings in smart-home devices.

A pile of broken and burned microchips.

Image source: Getty Images.

Now what

Management also set first-quarter guidance targets at or below Wall Street's consensus levels, adding weight to the downward market pressure. Silicon Labs' investors seem to expect a return to full health soon enough, though -- the stock is trading at a lofty 248 times trailing earnings and 31 times free cash flow.

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