Personal Finance

Why Silicon Laboratories Stock Dropped Today

Stock market data with a red line chart indicating losses

What happened

Shares of Silicon Laboratories (NASDAQ: SLAB) were down 13.4% as of 2:45 p.m. EST Wednesday after the fabless semiconductor specialist announced disappointing fourth-quarter 2018 results.

Silicon Labs' revenue climbed 7.2% year over year to $215.5 million, translating into adjusted earnings of $40 million, or $0.91 per share. By comparison, the company's latest guidance ( provided in October ) called for revenue in the range of $221 million to $227 million, and earnings per share of $0.91 to $0.97.

Stock market data with a red line chart indicating losses

Image source: Getty Images.

So what

For perspective, recall three months ago Silicon Labs stock fell after the company's strong third-quarter report was overshadowed by what what CEO Tyson Tuttle described as "near-term turbulence in macro and regulatory environments as well as end markets." Given today's relative underperformance, it seems concern over that turbulence was well-founded.

Still, Tuttle insisted today that the company is "proud" of its performance over the past year.

"Despite current volatility, we remain confident about our longer-term ability to outperform the market," Tuttle added. "We are focused on executing on our product roadmaps and converting a large pipeline of opportunities into additional wins and share gains."

Now what

For the first quarter of 2019, Silicon Labs expects revenue in the range of $183 million to $193 million, with adjusted earnings per share between $0.42 and $0.52. Here again, the midpoints of both ranges were well below consensus estimates predicting first-quarter earnings of $0.82 per share on revenue of $219.5 million.

That doesn't mean Silicon Labs is a broken business. To the contrary, it still boasts an enviable position serving many promising end markets. But our stock market hates being effectively told to hurry up and wait, so it's no surprise to see shares falling in response today.

10 stocks we like better than Silicon Laboratories

When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor , has quadrupled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Silicon Laboratories wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of November 14, 2018

Steve Symington has no position in any of the stocks mentioned. The Motley Fool recommends Silicon Laboratories. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

SLAB

Other Topics

Stocks

The Motley Fool

Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

Learn More