What happened
Shares of Knowles (KN 2.11%), a manufacturer of micro-acoustic microphones and speakers, plunged today after the company reported worse-than-expected fourth-quarter revenue and as management issued guidance for the first quarter that was far below Wall Street's consensus estimates.
The tech stock tumbled 17.3% as a result.
So what
Knowles reported non-GAAP (adjusted) earnings of $0.33 in the quarter, which was down 31% from the year-ago quarter but matched Wall Street's average estimate. Additionally, the company's fourth-quarter revenue dropped nearly 16% to $197.1 million and fell below analysts' consensus estimate of $210 million.
NYSE: KN
Key Data Points
Knowles CEO Jeffrey Niew said in prepared remarks that the company continued to experience "weak end market demand in consumer electronic markets" and that "excess channel inventory continued to dampen revenues" for Knowles' consumer microphone sensors.
However, Niew also added that the company achieved non-GAAP gross margins and free cash flow that was at or above management's high end of its guidance range.
But investors were more focused on the fact that Knowles' management issued weak guidance for the first quarter.
The company expects non-GAAP earnings to be $0.04 and revenue to be $147.5 million, both at the midpoint of guidance. Those estimates are far below Wall Street's expectation of $0.23 in earnings per share and $182.7 million in sales.
Now what
Technology investors are particularly focused on company guidance right now, as they try to determine how companies could be affected by a potential economic slowdown. And comments made by Niew provided little reassurance.
"Our guidance anticipates continued weak consumer end market demand and customer inventory adjustments through the end of Q1," Niew said.
While he believes there will be some earnings and revenue improvements for the company in the second quarter, investors aren't as optimistic about the company's short-term outlook right now.
