Sometimes life -- or at least, life on Wall Street -- just isn't fair. Silicon Labs
But it wasn't to be. The company had one more thing to say before heading out the exit: "We are taking a very cautious view on the industry in the fourth quarter." And with that, Wall Street took a very cautious view of Silicon Labs' worth, slicing $370 million off the company's market cap and knocking the stock for a 21% loop. All of this happened, of course, after the market closed last night. Today, peer chip makers ARM Holdings
It could have been worse. Silicon Labs projects revenues of about $95 million for the fourth quarter. That's 24% less than the Street was expecting the company to sell during the period, so perhaps a 21% drop isn't so bad after all. Yeah, tell that to Silicon Labs' shareholders.
Considering how focused the market is on projections of future results, the company's other reported numbers probably aren't going to sway its opinion. But just for the heck of it, let's take a look. Free cash flow for the first nine months of 2004 came in at $44.6 million, almost double the year-ago period's $22.5 million. A back-of-the-envelope calculation of Silicon Labs' likely free cash flow by year-end, therefore, comes to about $60 million -- which would be down considerably from the trailing 12 months number cited on Yahoo!
Fool contributor Rich Smith owns none of the companies mentioned in this article.