These three companies just didn't live up to Mr. Market's expectations last week. Sometimes an earnings stumble is a signal to sell, but digging in the dirt is also a good way to find turnaround candidates while they're getting beaten down.

All that and a bag of microchips?
The first disappointment this week comes from National Semiconductor (NYSE:NSM). The chip designer's $0.14 of earnings per share was a surprise to Wall Street, a third less than what analysts had expected. Sales dropped 16% year over year to $422 million, and the company couldn't come close to last year's $0.33 of income per share.

The report came the same day as a grave warning from Texas Instruments (NYSE:TXN), emphasizing that the semiconductor industry as a whole is suffering under the heavy hand of this global recession. The steepest fall-off in National Semi's orders this quarter came in Europe and the Asia-Pacific region, showing that geographic diversity cuts both ways.

Now, CEO Brian Halla thinks that this financial crisis is more of an opportunity than a problem. "This is not a hunker-down recession," he told analysts in the earnings call. "It is time for our industry to drive its own recovery." He does have a point, because National Semi is still profitable even today and can afford to invest in its own infrastructure and research.

Then again, Halla's powers of prognostication don't have a great track record. "Well, it looks like we weathered through the bottom of this cycle pretty well," he said -- in June. Oops. But I'll give him that mulligan. National Semi is in great shape despite the market shenanigans, and it should bounce very nicely when the economy turns around again.

Plain white tees
Let's move on to Canadian apparel wrangler Gildan Activewear (NYSE:GIL), which presented us with a mixed bag of news. One the one hand, non-GAAP earnings fell 5% year over year to $0.41 per share, missing estimates by a couple pennies. But on the other hand, sales soared 27% over last year to $325 million, and Gildan gained market share -- in a sector that includes Berkshire Hathaway's (NYSE:BRK-B) Fruit of the Loom.

The earnings miss was a result of higher prices on important items such as cotton, and GAAP results looked really bad because of a massive $0.22 charge per share to settle a Canadian tax audit bill. But business looks fundamentally strong here. Gildan increased its sales volume and market share while raising prices.

The next time you pick up a screen-printed T-shirt at a football game or a rock concert, there's an increasing probability that you'll get a Gildan product. And grabbing better than a 50% market share against one of Warren Buffett's best-known brands is quite a feat. This stock is definitely worthy of further research, Fool.

The network is the computer, and vice versa
We're back in Silicon Valley to meet Ciena (NASDAQ:CIEN), our last underperformer this week. I mean the concept of the Valley rather than the actual place, of course; my house in Baltimore is a long way from San Francisco.

The average analyst was hoping for a small profit, perhaps $0.06 per share on roughly $200 million in sales. The networking equipment maker's $0.10 loss per share on a paltry $180 million in sales was a bucket of ice-cold water over those dreams.

CEO Gary Smith didn't apologize for anything, instead pointing out that full-year sales grew 16% over 2007, while both gross margins and cash flows also moved in the right direction.

And according to Smith, this turndown won't hurt networking businesses like Ciena and Cisco (NASDAQ:CSCO) as badly as the 2001 dot-com bubble did. As he put it, that meltdown was driven by demand fueled by "speculation, excessive network builds and overcapacity and with a disregard for economic fundamentals." This time, top service providers such as AT&T (NYSE:T) have been careful about building out their networks in a fiscally responsible manner and the demand for greater network capacity is real, Smith says.

Because of this fundamental difference, the dot-com recovery took several years, but this one should hurt for only a few quarters, according to Smith. I can't argue with the logic there, and Ciena does have a $1.7 billion cash cushion to see it through the lean times. Cisco still looks like a better choice in my eyes, but there's nothing fundamentally wrong about Ciena if you prefer it.

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Fool contributor Anders Bylund holds no position in the companies discussed this week, and he rarely buys event T-shirts. You can see his current holdings for yourself. The Fool has an ironclad disclosure policy.