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: Applied Micro Circuits (Nasdaq: AMCC) dropped 17% in intraday trading today after reporting an inline quarter with disappointing gross margins.

So what: Non-GAAP EPS of $0.01 met the consensus estimate but declined from $0.12 in the year-earlier quarter. GAAP EPS deteriorated to -$0.11 from -$0.06 in the year-earlier quarter. Revenue was flat year-over-year and was inline with the company's goals, but a mix shift to lower-end products caused gross margins to decline to 56.7% from 63% in the year-ago quarter.

Now what: Management stated it continues to "see a high level of interest in our products and technology" and be convinced that "the long term fundamental growth drivers of our business remain intact." The CFO was not so sanguine about near-term outlook, however. He said, "The unexpected change in gross margin is disappointing and as a result we will take actions to rebalance our operating expenses while retaining focus on the delivery of our new high growth products."

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Fool contributor Cindy Johnson does not own shares of any company named above. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.