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Silicon Motion Technology Corp. | $SIMO Stock | Shares Fall On Poor Guidance Numbers Despite Earnings Beat

|Includes: Silicon Motion Technology Corporation (SIMO)

Silicon Motion Technology Corporation (NASDAQ: SIMO)

Silicon Motion Technology Corporation , a global semiconductor company yesterday reported their fourth quarter 2016 financial results. Silicon Motion reported fourth quarter earnings of $0.95 per share which beat analyst estimates of $0.89 per share. Silicon Motion reported fourth quarter revenues of $144.2 million which beat analyst estimates of $141.9 million. However First Motion forecasted revenues for the first quarter of 2017 to be in between $121 and $128 million which fell short of analyst estimates of $135.2 million.

Silicon Motion Technology Corporation CEO's Comments

"Due to continuing strength of our SSD controller business, representing our ninth consecutive quarter of SSD controller growth, we achieved fourth quarter sales that were on the high-end of our expectations," said Wallace Kou, President and CEO of Silicon Motion. "Strength from our SSD controllers was however offset by seasonally weak eMMC controller sales and SSD Solutions project transitions. For full year 2017, we expect sales of our client SSD controllers to continue growing strongly, but NAND flash availability will affect our SSD Solutions," said Wallace Kou, President and CEO of Silicon Motion. "NAND flash tightness will start affecting our SSD Solutions beginning in the first quarter. Additionally in the first quarter, our client SSD controllers will decline seasonally, with growth restarting in the following quarter." Globe Newswire

SIMO Technical Analysis

SIMO opened trading yesterday at $42.87 which was up from the previous day's trading close of $42.74. SIMO closed trading yesterday at $43.34 and crashed down after market to $40.50, equivalent to a 7% decrease from the closing price. Taking a look at the daily chart we can see that the last time SIMO traded below these levels we have to go back to October 28th, 2016 when it traded at $40.43. Taking a closer look at the daily chart we can see that before the spike down SIMO had already been in an overall downward trend dating back to September 7th, 2016 when it traded at $55.85.

SIMO has a float of 32.41 million shares and traded 2.91 times the normal daily trading volume on Monday. For trading purposes, I would like to see SIMO open trading on Tuesday below $41.50 and if it does I would be looking to take a short position at the bell. My stop loss would be $0.30 from my entry position fearing anything more than that and the stock would start to fill in the gap down.

Company Profile

Silicon Motion Technology Corporation, a fabless semiconductor company, designs, develops, and markets semiconductor solutions for the mobile storage and mobile communications markets worldwide. It offers embedded storage and expandable storage products, including NAND flash controllers, such as embedded MultiMediaCard (eMMC), client solid-state drive (NYSE:SSD), flash memory card, and Universal Serial Bus flash drive controllers.

The company also provides specialty storage solutions, such as customized enterprise-grade Peripheral Component Interconnect Express (PCIe) SSDs; and industrial-grade and commercial-grade single-chip SSDs. In addition, it offers specialty radio frequency integrated circuits (RF ICs), such as mobile TV system-on-chips and handset RF ICs. The company’s products are used in smartphones, tablets, digital cameras, and desktop and notebook PCs, as well as in industrial, enterprise, commercial, and other applications. It offers its products under the SMI, Shannon Systems, Ferri SSD, Ferri-eMMC, and FCI brands.

The company markets and sells its products through direct sales personnel and independent electronics distributors to original equipment manufacturers and module makers. Silicon Motion Technology Corporation was founded in 1995 and is headquartered in Zhubei City, Taiwan. Yahoo Finance

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Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.