Why Silicon Motion Technology Tanked

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 Silicon Motion Technology (NAS: SIMO) have tanked today by as much as 19% after the semiconductor company reported earnings.

So what: Revenue jumped to $64 million, with adjusted earnings per share of $0.41. Both of those figures bested the market's forecasts of $61.2 million in revenue and a $0.33 per share profit. The quarter marked Silicon Motion's highest first-quarter revenue ever.

Now what: Today's pessimism is likely tied to warnings from CEO Wallace Kou, who said that retail demand for memory cards and end demand for smartphones that include Silicon Motion's products have been weak. Kou also expects this to continue in the second quarter, although the company hopes strength in other areas will offset the softness. Next quarter's revenue is expected to be between flat and up 10% sequentially.

Interested in more info on Silicon Motion Technology? Add it to your watchlist byclicking here.

At the time thisarticle 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.