What happened 

Shares of Alpha and Omega Semiconductor (AOSL -0.91%), a semiconductor designer and supplier, were falling fast today after the company reported disappointing fiscal second-quarter results. 

The company missed analysts' average estimates for both its top and bottom lines and issued revenue guidance that didn't exactly instill confidence in investors. 

The semiconductor stock was down by 13.4% as of 1:25 p.m. ET.  

So what 

Alpha and Omega Semiconductor (AOS) reported non-GAAP (adjusted) earnings of $0.67 per share for the fiscal second quarter, ended Dec. 31, which was down significantly from $1.20 per share in the year-ago quarter and below Wall Street's consensus estimate of $0.88. 

Unfortunately, the company's revenue failed to meet expectations as well. AOS sales were down 2.4% from the year-ago quarter to $188.8 million and missed analysts' average estimate of $196.7 million for the quarter. 

AOS CEO Mike Chang said in a press release that the company's business "was negatively impacted by the industrywide inventory correction and reduction of customer demand," but added that he believes the company will emerge from the current downturn stronger than before. 

Investors have had little patience for companies that don't report strong quarterly financial results lately, and AOS investors were no exception today. 

Now what 

What's making matters worse for the stock was the fact that AOS' management is expecting more pain ahead. 

Chang said that there will be a decline in revenue in the third quarter as well. AOS estimates sales will be $130 million at the midpoint of guidance, which is far below Wall Street's average estimate of $193.8 million. 

The company is expecting sales to begin recovering in the second half of 2023, with the reopening of China helping the company's semiconductor sales later in the year.