SILC Q1 08 Results

By: ispeculatornew
Date posted: 04.29.2008 (10:04 pm) | Write a Comment  (0 Comments)

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SILC – Silicom Limited (NASDAQ) – (Closing Price – $9.50) 

Silicom Ltd. announced their first quarter 2008 results yesterday and reported an increase in revenue but flat growth in earnings. Amazingly, the stock price has dropped more than 25% since the news.

Silicom reported revenue of 7.70 million which was up 27% compared to Q1 2007 and up 3% compared to the prior quarter. EPS came in at 0.26 per diluted share. This was an improvement of 0.04 over last year but EPS has been flat the last few quarters.

I don’t think flat growth merited such a huge sell off considering the fact that businesses have been cautious in their spending due to the uncertain economic climate (flat growth could actually be looked at as a positive). Also, Silicom wasn’t trading at an expensive valuation before earnings so it shouldn’t have sold off so much after earnings.

I think the share price of Silicom may continue to trade flat or down for a quarter two if companies continue to cut back on their spending but the stock price will quickly rebound when the economic picture starts to look better. I think it would be wise to be patient with Silicom and I am going to recommend to continue holding your shares.

Disclaimer: I currently own shares of SILC.

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