Why Cavium Plunged
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What: Shares of semiconductor maker Cavium (NAS: CAVM) have plunged today by as much as 12% after the company reported earnings along with soft guidance.
So what: Revenue in the first quarter totaled $52.7 million, with adjusted earnings per share of $0.02. On a GAAP basis, that bottom line was a net loss of $13.8 million, or $0.28 per share. On the subsequent conference call, the company also provided outlook that fell short.
Now what: Cavium expects second-quarter revenue to be in the range of $54 million-$56 million, with adjusted earnings of $0.01-$0.03 per share, while analysts were looking for more than $56 million in sales and $0.06 per share in profit. There's now talk that management may even be considering rethinking its consumer strategy and refocusing its efforts. Needham & Co. is still bullish, though, reiterating its buy rating with a $33 price target, believing revenue growth should resume next quarter.
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