Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Enterprise systems management software shop Quest Software (Nasdaq: QSFT) saw its shares take a beating today, falling as much as 16.7% on many times the average trading volume.

So what: Quest's first-quarter results missed Street estimates on both the top and bottom lines, hampered by sliver-thin margins as operating costs skyrocketed. The company just opened a brand-new operations center in Ireland, and those projects don't come cheap.

Now what: Sales increased by 10% year-over-year but would have flatlined if not for a couple of recent tuck-in acquisitions to boost revenue. I read that as a lack of excitement for Quest's systems management suite -- and perhaps an opportunity for CA (NYSE: CA) and IBM (NYSE: IBM) to steal market share from Quest. That's hardly an ideal position for a small-cap niche player in a bustling industry, and no support at all for Quest's premium valuation of more than 20 times trailing earnings.

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