Why Nam Tai Shares Got Crushed

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 Nam Tai Electronics got crushed today by as much as 37% after the company reported earnings.

So what: Revenue in the first quarter more than doubled to $177.5 million, which translated into earnings per share of $0.11. Both figures handily topped consensus estimates, which were calling for $150 million in sales and $0.05 per share in profit. The real cause for concern was within Nam Tai's guidance.

Now what: The company noted that it relies on a very small number of customers and LCD module orders from these major buyers were "significantly lower" than expected. That meant that Nam Tai was forced to cut prices in response, and the company also suspects that other orders could be cancelled. Nam Tai has decided to halt capital investment in its platforms to mitigate the risk of wide fluctuations in order activity since those investments may not yield steady income streams. The company warned that it may have to shutter LCD module operations altogether if the market doesn't improve.

Interested in more info on Nam Tai? Add it to your watchlist by clicking here.

It's incredible to think just how much of our digital and technological lives are almost entirely shaped and molded by just a handful of companies. Find out "Who Will Win the War Between the 5 Biggest Tech Stocks?" in The Motley Fool's latest free report, which details the knock-down, drag-out battle being waged by the five kings of tech. Click here to keep reading.

The article Why Nam Tai Shares Got Crushed originally appeared on Fool.com.

Fool contributor Evan Niu, CFA, has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.