MEMC Electronic Materials Shares Plunged: What You Need to Know

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: MEMC Electronic Materials (NYS: WFR) dropped 14% in intraday trading today, after issuing disappointing earnings and guidance.

So what: Second-quarter non-GAAP EPS of $0.01 badly missed the $0.06 consensus estimate and fell 83% year over year. Revenue of $746 million grew 66% year over year, helped by the resolution of a long-term wafer supply agreement with Suntech Power Holdings. Excluding the Suntech resolution, revenue grew 33%.

Now what: Management blamed the disappointing results on "a sharp slowdown and weaker pricing in solar wafer markets and a modest softening of underlying semiconductor demand." Despite cost-cutting actions in response to the weak environment, 2011 guidance was lowered to non-GAAP revenue of $3.3 billion to $3.6 billion, and non-GAAP EPS of $0.80 to $1.00. Prior guidance called for $3.4 billion to $3.7 billion, and $1.00 to $1.30, respectively, while the consensus forecast predicted $3.4 billion and $0.90.

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At the time this article was published Fool contributor Cindy Johnson does not own shares of any company named above. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.

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