Stock-based compensation disclosure rule FAS-123R has claimed another victim. Semiconductor designer Analog Devices (NYSE:ADI) failed to meet internal forecasts, thanks in part to high stock option expenses. $16.6 million worth of stock and options were handed out to the company's employees this quarter, which accounts for $0.04 of the $0.05 estimate miss on earnings per diluted share.

That's not the whole problem, of course; weakness in the computer and wireless-handset segments led to slower-than-expected sales growth, and management said that it expects that trend to continue into the next quarter, leading to another slow growth performance.

I don't think that Analog Devices is performing too poorly on its own; instead, I believe the entire semiconductor industry has hit the skids lately. Household names Intel (NASDAQ:INTC) and AMD (NYSE:AMD) are locked in a price and performance war that cuts into revenues and earnings, and excellent businesses like STMicro (NYSE:STM) and Texas Instruments (NYSE:TXN) seem to have been sucked into the overall market doldrums, trading at historically low multiples today. The Philadelphia Semiconductor Index is trading more than 20% below its 52-week high, after a precipitous fall during the spring. Analog Devices is just riding along with everybody else.

It's hard to say when the semiconductor downturn will reverse, but I'd be surprised if this sector fell much further. But you know what they say about catching falling knives. Maybe it's best simply to stay away from these stocks until we have solid signs of a recovery. That goes for you too, Analog.

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At the time of publication, Anders Bylund had no position in any of the stocks discussed. Fool rules are here .