What Happened:
Shares of semiconductor designer Lattice Semiconductor (NASDAQ:LSCC) fell 15.4% in the morning session after the company announced that President and Chief Executive Officer Jim Anderson is stepping down to pursue new opportunities. Esam Elashmawi, Chief Marketing and Strategy Office will replace him as Interim Chief Executive Officer effective immediately.
An update from Coherent (NYSE: COHR), another semiconductor company, revealed that Jim Anderson will become its new Chief Executive Officer.
According to the press release, Lattice's Board has commenced a search process to identify a permanent CEO and will consider internal and external candidates. The market is likely unsettled by the sudden CEO exit as it creates an air of uncertainty and the stock is down as a result.
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What is the market telling us:
Lattice Semiconductor's shares are somewhat volatile and over the last year have had 17 moves greater than 5%. But moves this big are very rare even for Lattice Semiconductor and that is indicating to us that this news had a significant impact on the market's perception of the business.
The biggest move we wrote about over the last year was 7 months ago, when the stock dropped 13.7% on the news that the company reported third quarter results with revenue guidance for the next quarter roughly 10% below Wall Street's expectation before the quarter was reported. Lattice explained that the weak revenue forecast was due to reduced demand in communications infrastructure in Europe as well as industrial and automotive markets in Europe and Asia. While management believes in the long-term potential for their products, they cited high interest rates as a dampener to near-term demand. Management added on the earnings call that distributor and large end customer inventories remained healthy (high inventory levels could mean fewer future orders), but the market seemed somewhat skeptical.
On the other hand, revenue and EPS outperformed Wall Street's estimates, even if the beats weren't too big. Overall, the results could have been better.
Lattice Semiconductor is down 7.2% since the beginning of the year, and at $63.47 per share it is trading 34.7% below its 52-week high of $97.26 from August 2023. Investors who bought $1,000 worth of Lattice Semiconductor's shares 5 years ago would now be looking at an investment worth $4,954.
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