Why RDA Microelectronics Plunged

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 RDA Microelectronics (NAS: RDA) have plunged today by as much as 10% after the company reported first-quarter earnings.

So what: The chip specialist posted revenue of $72 million, with non-GAAP net income of $15.1 million, or $0.33 per share. Both figures easily topped the market's expectations of $68.8 million in sales and earnings of $0.29 per share. Revenue also exceeded the company's own guidance of $69 million-$71 million.

Now what: CEO Vincent Tai said the revenue was driven by strong demand after the Chinese New Year holiday, while increased shipment volumes offset price declines seen during the quarter. On the guidance front, second quarter revenue should be between $94 million and $100 million. What may be weighing on investors is the fact that gross margins are supposed to decline as a result of the company's recent acquisition of Coolsand, whose baseband business is less profitable.

Interested in more info on RDA Microelectronics? 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.