What Happened:
Shares of semiconductor maker Himax Technologies (NASDAQ:HIMX) fell 8.09% in the morning session after the company reported first-quarter results that exceeded analysts' expectations for revenue, though sales were down in absolute terms falling 41% year on year. The sales decline was attributed to a sudden demand drop in the automotive business. The automotive business has been the biggest revenue driver in recent years and accounts for over 30% of total sales. On a brighter note, earnings per share (EPS) beat estimates, and free cash flow and inventory levels both improved. However gross margin deteriorated coming in at 28%, down from 47% in the same quarter last year. Management noted that "Himax is going through a challenging second quarter in terms of both sales and gross margin but believes this will be a short-term phenomenon with a rebound around the corner starting in the second half." There many puts and takes, positives and negative, this quarter but overall it was a poor performance.
What is the market telling us:
Himax's shares are quite volatile and over the last year have had moves greater than 5%. In context of that, today's move is indicating the market considers this news meaningful but not something that would fundamentally change its perception of the business.
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