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What: Shares of Entropic Communications (UNKNOWN:ENTR.DL) have dropped today by as much as 18% after the company reported earnings.

So what: Revenue in the second quarter totaled $70.6 million, with non-GAAP earnings per share of $0.01. Both figures were slightly ahead of expectations, which were calling for $70.3 million in revenue on a break-even bottom line. Entropic management gave guidance on the call that spooked investors, however.

Now what: Third-quarter sales are expected to be $55 million to $57 million, a 20% sequential decline at the midpoint. This comes at a time that Entropic usually sees stronger sales. CFO David Lyle said that design wins are taking longer to ramp at service providers, and that the set-top box chip business is also seeing some ramp delays until mid-2014. Mizuho Securities and Benchmark have downgraded shares as a result.

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