NEW YORK (TheStreet) -- Shares of SemiLeds (LEDS) - Get Report are slumping by 17.62% to $6.69 in mid-afternoon trading on Wednesday, after the company announced disappointing fiscal 2016 third quarter results on Tuesday. 

On a non-GAAP basis, the company posted a net loss of $1.06 per diluted share, wider than the company's 2016 second quarter net loss of 77 cents. 

SemiLeds reported $2.4 million in revenue for the third quarter of fiscal 2016, an 18% decrease from the $2.9 million in revenue posted for the second quarter. 

The Taiwan-based developer and manufacturer of LED chips and LED components has been transitioning to a fabless business model, meaning it will outsource the manufacturing of silicon wafers so it can concentrate on the design, development and marketing of the company's products.

"The transition toward the fabless business model has taken longer than we anticipated; however, we still believe it is the right model," company CEO Trung Doan said in a statement. "This should help us to lower our cash needs while evaluating other potential business opportunities." 

Separately, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:

We rate SEMILEDS CORP as a Sell with a ratings score of D. This is driven by a number of negative factors, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. Among the areas we feel are negative, one of the most important has been poor profit margins.

You can view the full analysis from the report here: LEDS

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