Synaptics (NASDAQ:SYNA) -- which makes touchpads used in laptops and digital music players -- last week reported quarterly earnings of $0.18 per share, well below the $0.33 in the same quarter last year. The sales numbers were equally dismal, coming in at $48.6 million, 14% lower than last year's $56.5 million. In the conference call, Synaptics' chief financial officer predicted that the next quarter's sales figures would be $42 million to $45 million. As a result, investors were heading toward the exit signs. The stock price fell nearly 20% by the close of trading Friday. Ouch!

For shareholders, this should not have been a huge surprise. Synaptics has been giving lower guidance since early last year, after news hit the Street that Apple Computer (NASDAQ:AAPL) would no longer use the company's click-wheel feature in the next series of iPods. Apple also switched from using Synaptics touchpads for its PowerBooks to those made by Cypress Semiconductor (NYSE:CY). After losing half its value in the last year, Synaptics' stock gained favor again and increased nearly 55% over three months.

A simple fact remains. The relative growth (compared with its other businesses) iPods and the associated touch-wheel business might well have provided is gone. And the growth outlook doesn't contain anything I'd perceive to be an immediate or longer-term catalyst. Then consider the 178% increase in net income in the few quarters past, and the fact that I see the rate of sales growth for its touchpad technology and click-wheels for MP3 players failing to keep pace with past figures -- a factor that was ostensibly built into the company's valuation.

The bottom line: Those who bought Synaptics stock thinking it would return to the highs of 2005 might be in for a disappointment. Last year, the company appeared poised for solid growth and, accordingly, looked to be an undervalued tech stock. But the financial landscape has changed. At current prices, the stock sports a trailing P/E of 21, not at all too cheap considering the earnings growth forecast is for the low single digits. Foolish investors would be wise to wait before buying until Synaptics delivers.

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Fool contributor Kelvin Taylor does not own shares of any of the companies mentioned.