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GPS chip maker SiRF Technology Holdings (SIRF) got beaten up pretty bad yesterday. The stock went down 11.46% to end the session at $26.20. This is a stock I own and wrote positively about in the past.

What happened?

- Jefferies & Co. analyst Adam Benjamin speculated that SiRF may have lost business with TomTom One to privately held Global Locate.
- SiRF used to be the exclusive supplier to Europe’s TomTom, a competitor of Garmin (NASDAQ:GRMN), but TomTom is going with Global Locate for its TomTom One line of GPS products. SiRF chipsets will still be used in the high end TomTom product line but not the low end TomTom One products.
- Jefferies & Co. also cut the price target on the stock to $34 from $36, and lowered the 2007 revenue estimate to $304 million from $321 million.

What now?

- Deutsche Bank Securities analyst Brian Modoff said potential market share loss that drove shares down Thursday “does not change the fundamental case for the company.”
- Brian Modoff further added that SiRF will inevitably lose some of its market share and he saw “no reason” to change earnings estimates. He said the competitor won the deal by offering lower prices, not a better product, and “given the important of accuracy and reliability” for their products, “we think a pricing-taking strategy can only go so far.” Deutsche Bank maintained a “Buy” rating and $33 price target.
- The cellphone GPS market is still in its infancy and provides a huge opportunity for SiRF.

What will I do?

- As it turns out, I am still in positive territory even after yesterday’s big fall, although not by much. I actually didn’t get a chance to even consider selling because it was too late as the stock had fallen considerably before I could react.
- I like the fact that the stock is up today. I am going to closely monitor the stock to see how it reacts. If the downturn continues, I might just sell all or part of my holdings and try to predict the bottom to buy again.

SIRF 1-yr chart:

SIRF 1-yr chart

Disclosure: author is long shares of SIRF.

Source: SiRF Technology Holdings Experiences Wipeout