What: Shares of patent risk management company RPX Corp. (NASDAQ:RPXC) plunged 18% on Wednesday after the company reported earnings.
So what: Revenue for the fourth quarter rose 8% to $72.8 million on the back of a 7% increase in subscription revenue. But net income dropped from $9.2 million a year ago to $5.5 million, or $0.10 per share. For the full year, net income was up only slightly to $39.4 million, while earnings per share dropped a penny to $0.71.
Now what: What investors are keying in on today is the anticipated decline in financials in 2016. Management gives non-GAAP earnings guidance and said it expects to earn $39 million to $46 million this year, which is down from the $54.7 million earned in 2015. The earnings decline is a bad sign after the recent $232 million acquisition of Inventus Solutions, and until we see some bottom line growth, this isn't a stock I'll jump into.
Travis Hoium has no position in any stocks mentioned. The Motley Fool recommends RPX. Try any of our Foolish newsletter services free for 30 days. 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.