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Silicom Limited | $SILC Stock | Shares Plummet On Broken Contract

|Includes: Silicom Ltd (SILC)

Silicom Ltd. (NASDAQ: SILC)

On a crazy day of stock trading in the markets on Tuesday March 13th, 2018 which saw markets gap up at the open and trade higher for the first portion of the morning, many equities suddenly began to experience institutional and trader sell orders.

The markets, which had been reacting to favorable economic data at the beginning of the session reversed their trend and wound up closing down- stunning many participants.

The Dow Jones Industrial Average, Nasdaq Composite and S&P Index did a complete about-face in trading-all closing in the red. The DOW close down 171 points, the NASDAQ closed down 77 points, and the S&P index closed down 17 points.

One company which was heading lower despite the market action early on was an Israeli-based company named Silicom Ltd. which operates in the cloud and infrastructure space geared to enhance corporate operations in multinational companies.

The company announced that one of their biggest purchasers of their services had aborted moving forward with a contractual agreement which would have added substantial revenues to silicones quarterly earnings. Shares closed down during the regular trading session at $40.66 which was down $17.90 or 30.57%.

The after-hours was equally bloody, seeing the shares close down 16.40% lower at $33.99 or down $6.67 as of 8 pm. The company that decided to cancel the contract was not named in any media outlets that we researched. Information and more details regarding this corporate development were hard to find as of this writing but the author will keep the reader updated when more information is readily made available.

Company Comments

Shaike Orbach, Silicom's President and CEO, had this to say to investors,

“While we are obviously disappointed with the customer's decision, we are encouraged by the technological success of the highly complex product that we developed for them: a success which has generated significant admiration for Silicom within this giant customer and its Tier-1 server manufacturer partners. We hope to leverage this trust to address additional significant opportunities with both the customer and its partners."

The Charts

The above price chart shows Silicon Ltd. going back one full year on the daily time frame. You can see how the shares had been appreciating comfortably until their most recent quarterly earnings report on January 29th and then the most recent news that occurred today.

The above price chart shows the intraday action on the 5 minute time frame on the left and the after-hours timeframe on the right. It is clear to see how the stock traded in a downtrend all day and then in the after-hours sold off even more sharply before finding a short-term bottom.

Company Profile

Silicom Ltd., together with its subsidiaries, designs, manufactures, markets, and supports networking and data infrastructure solutions for a range of servers, server based systems, and communications devices in North America, Europe, and the Asia Pacific. It offers server networking interface cards with and without bypass for the server networking industry.

The company also provides intelligent and programmable cards, including redirector cards; encryption and data compression hardware acceleration cards; time stamping and full field programmable gate array (FPGA) based network capture and mobile OSS distribution solutions; network processor acceleration cards; FPGA based ultra-low latency solutions; and compute blades, which offer general compute capability in networking intensive environment.

In addition, it offers bypass switches and intelligent bypass switches; server to appliance converter products that enable standard servers to be configured as network appliances with front networking ports; and CPE/edge/low end appliance units. The company sells its products to original equipment manufacturers. Silicom Ltd. was founded in 1987 and is headquartered in Kfar Sava, Israel.-YahooFinance

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