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.

Devices like this 1080p surveillance camera drove Vimicro's sales 17% higher in the first quarter. Image source: Vimicro.

What: Shares of video surveillance specialist Vimicro International (UNKNOWN:VIMC.DL) fell as much as 12.1% in Wednesday's morning session. The stock recovered somewhat with heavy trading volume, but remained down by 5% as of 1 p.m., Eastern time.

So what: The Beijing-based company reported first-quarter results in the early morning hours. Sales of $19.2 million fell just short of the only reported analyst estimate, which pointed to $19.5 million. On the bottom line, Vimicro posted a $0.05 adjusted loss per American depositary share while our single analyst was looking for a breakeven quarter. Moreover, longtime independent director Jeffrey Zeng retired from the board of directors, effective immediately. Due to the Nasdaq market's listing rules, this move forced Chief Technology Officer Raymond Zhang to also step down from his board post, reducing Vimicro's board to seven members.

Now what: Vimicro is retreating from a position of strength, having set multiyear record prices last week. At that point, investors could look back at an eleven-fold return over just 21 months.

Q1 sales rose 17% year-over-year with a 41% order surge for video surveillance processors, despite a seasonally slow quarter. In prepared comments, Vimicro CEO John Deng noted that his company benefits from the Chinese government's increased video surveillance spending. This might make Vimicro something of a sin stock for many American investors, but that trend obviously increases this microcap's addressable market.

This stock remains risky and skittish due to its small size and light analyst interest, but Vimicro does serve an interesting market with plenty of potential growth ahead.