Why Silicon Graphics Shares Sank

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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of computing and storage equipment company Silicon Graphics plunged 12% today after its quarterly results and outlook disappointed Wall Street.

So what: The stock has soared over the past year on solid revenue growth, but today's top-line miss -- revenue dipped 5% to $170.5 million vs. the consensus of $178 million -- coupled with downbeat guidance is forcing Mr. Market to sober up a bit. Of course, management cited the timing of a few big deals for the less-than-stellar outlook, suggesting that the pressure is just short term in nature.

For the first quarter, management now sees a loss of $0.07 to $0.14 per share on revenue of $160 million to $170 million, well below Wall Street's view of $0.18 and $181.5 million. "We are on track with our operational and financial objectives for the year, including further improvement in profitability. [H]owever, because of the timing of many large deal opportunities as well as the ramp of new products, we expect our financial performance to be weighted toward the second half of the fiscal year," said CEO Jorge Titinger. With the stock still up about 150% over its 52-week lows, though, I wouldn't expect Wall Street to stay patient for too long.  

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The article Why Silicon Graphics Shares Sank originally appeared on Fool.com.

Fool contributor Brian Pacampara has no position in any stocks mentioned, and neither does The Motley Fool. 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.

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