Why 51job's Shares 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 Chinese recruiting specialist 51job (NAS: JOBS) were getting fired by investors today, falling as much as 13% in intraday trading after the company's first-quarter earnings report.

So what: Despite the nasty market action, there actually was some good news that 51job had to offer. For the quarter ending in March, the company delivered revenue of $60.5 million, up 17% from the first quarter of 2011. Gross margins improved and that helped drive 21% year-over-year growth in income from operations and a $0.64 earnings-per-share tally that topped analysts' estimates.

Now what: But shareholders are ever mindful of the future, and they weren't impressed with 51job's guidance for the upcoming quarter. Thanks in part to the fact that the company is moving away from the print advertising business, the high end of the second-quarter revenue guidance was short of what Wall Street was expecting. On the bottom line, the midpoint of management's guidance is a $0.63-per-share profit, which was just shy of the $0.64 mark that analysts were looking for.

While the company's guidance is disappointing, investors should keep the big picture in focus -- rarely is an investment thesis made or broken based on a few cents of per-share profit in a single quarter.

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At the time thisarticle was published Motley Fool newsletter services have recommended buying shares of 51job. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.Fool contributorMatt Koppenhefferhas no financial interest in any of the companies mentioned. You can check out what Matt is keeping an eye on by visiting hisCAPS portfolio, or you can follow Matt on Twitter,@KoppTheFool, or onFacebook. The Fool'sdisclosure policyprefers dividends over a sharp stick in the eye.

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