Pity the poor shareholders of Trident Microsystems (NASDAQ:TRID). Trident is a "growth" stock that used to have a growth stock price. But on Friday, the company announced Q1 2008 earnings and a disappointing outlook for Q2, and the shares shed more than 40% of their value. Apparently investors are wondering whether this growth company can deliver any more growth.

On a GAAP basis, Trident did manage to grow revenues this quarter. Revenue grew by 24% from a year ago, reaching $88.2 million -- although its operating expenses really took the growth baton, rising by 31%. As a result, its operating margin fell to 13.6% from 18.6% last year.

For the next quarter (fiscal Q2), Trident is predicting revenue to clock in around $70 million to $72 million. If Trident manages to hit the high end, its year-over-year growth rate will have shrunk to just 5.4% -- not so growthy.

In the conference call, Trident executives were forthright in explaining that the market for televisions is segmenting into high-quality sets, where Trident maintains a strong position, and value-priced sets, where it is seeing significant competition. Unfortunately for Trident, the inexpensive TV that we can buy while grocery shopping is good enough for most of us -- and there are plenty of companies willing to supply the chips.

Competition from companies like Genesis Microchip (NASDAQ:GNSS), Pixelworks (NASDAQ:PXLW), and much bigger companies like STMicroelectronics (NYSE:STM) are only one problem with this business. Another is that a small number of customers account for most of its revenue. For Trident's Q1, four customers chipped in 85% of its sales.

These factors were the primary reasons I suggested that Trident was overpriced earlier this year. While the repricing on Friday was certainly painful to anyone who owns the shares, they may be worth a look now.

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