Why Informatica's Shares Slipped

Updated

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 software company Informatica (NAS: INFA) were pummeled by Mr. Market today, losing as much as 10% in intraday trading.

So what: The dip in Informatica's shares today was driven by the announcement of the company's first-quarter results. As the earnings release's headline suggests -- "Informatica Reports Record First Quarter Revenues of $196 Million" -- the quarter was actually a strong one. That $196 million in revenue was up 17% from a year ago, and it topped analysts' estimates. On the bottom line, non-GAAP earnings per share of $0.35 jumped 25% from 2011 and beat Wall Street's expectation of $0.33.


Now what: During earnings season, investors tend to get much more panicky (or excited) about what the company is going to do as opposed to what it's already done. So even though first-quarter results for Informatica were strong, the fact that its second-quarter and full-year guidance was a bit soft as compared to Wall Street's estimates was enough to send investors into a tizzy. Multiple analyst notes following the conference call that highlighted expected weakness in European sales didn't help the situation, either.

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