Why Semiconductor Manufacturing International, Blucora, and Cray Tumbled Today
Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.
Mixed results on Wall Street Tuesday signaled the uncertain among stock market investors right now, as people try to figure out whether the latest rebound from January's modest correction will last or give way to another decline. At least for a few stocks, though, the mood was more dour, as Semiconductor Manufacturing International , Blucora , and Cray all dropped substantially today despite the relatively flat market.
Semiconductor Manufacturing fell 19% after the Chinese foundry business reported a revenue increase in its fourth quarter of just 1.2% from the year-ago quarter, as earnings fell precipitously. Falling gross margins pointed to the struggles in the semiconductor market recently, and SMI's first-quarter guidance was even less appealing, with expectations for a 5% to 9% drop in sequential revenue and the potential for further margin erosion. With Intel potentially waiting in the wings to utilize its manufacturing capability more profitably, Semiconductor Manufacturing and its foundry peers could soon see an elephant enter the space and make competition a lot tougher.
Blucora fell 8% after the company was the subject of a scathing attack from analysts at Gotham City Research, which made negative comments about the sustainability of its Dogpile and WebCrawler Internet search engines. The report appears to center on the idea that Google should end its relationship with Blucora, and that its TaxACT tax-preparation service provides only minimal protection against a share-price decline. Given the impact of past attacks from Gotham City on other companies, many investors appeared not to want to wait out what could become an extended short attack.
Cray dropped 14%, but it's important to put the move in context as Cray stock soared 39% last Friday. Today's drop erased about half of those gains, but investors remain optimistic about the supercomputer company's past performance and future prospects after its fourth-quarter earnings release. Perhaps the most telling remark was the company's statement that "a wide range of results remains possible," leaving plenty of room for outperformance as well as disappointment.
Upset with losing stocks? Maybe you've got the wrong ones.
It's no secret that investors tend to be impatient with the market, but your best investment strategy is to buy shares in solid businesses and keep them for the long term. In the special free report "3 Stocks That Will Help You Retire Rich," The Motley Fool shares investment ideas and strategies that could help you build wealth for years to come. Click here to grab your free copy today.
The article Why Semiconductor Manufacturing International, Blucora, and Cray Tumbled Today originally appeared on Fool.com.Dan Caplinger has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Intel. 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. The Motley Fool has a disclosure policy.
Copyright © 1995 - 2014 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.