Why Standard Microsystems Rallied

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 Standard Microsystems (NAS: SMSC) have rallied by as much as 17% after the company reported earnings yesterday.

So what: SMSC surprised investors and the Street with an adjusted fourth-quarter profit of a nickel per share, much better than the $0.17 per share loss that analysts were expecting. That made up for the fact that revenue came in a little light at $89.9 million, below the consensus estimate of $91.1 million.

Now what: CEO Christine King noted that the company's consumer electronics and automotive markets both generated double-digit annual growth and that SMSC has been focusing on cost reductions. For next year, the company is predicted a profit of $0.29 to $0.38 per share on revenue in the range of $98 million to $102 million. Both of those guidance ranges handily top what the Street was looking for.

Interested in more info on Standard Microsystems? Add it to your watchlist byclicking here.

At the time this article was published Fool contributorEvan Niuholds no position in any company mentioned.Click hereto see his holdings and a short bio. The Motley Fool has adisclosure policy. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. Try any of our Foolish newsletter servicesfree for 30 days.

Copyright © 1995 - 2012 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Read Full Story