Genesis Microchip Hammered on Guidance

It sees fourth-quarter sales of $62 million to $67 million.
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Shares of

Genesis Microchip

(GNSS)

tanked late Thursday as the company's third-quarter earnings beat estimates but sales guidance was soft.

The maker of processing technologies for video displays earned $7.37 million, or 20 cents a share, in the third quarter, compared with a loss of $1 million, or 3 cents a share, a year ago. Pro forma to exclude costs including amortization and stock-based compensation, Genesis earned $10.2 million, or 27 cents a share, in the latest quarter, beating estimates by 3 cents.

Sales rose 53% from a year ago to $74 million. Analysts had been forecasting $74.7 million.

The stock sold off on the company's estimate for the fourth quarter, which ends in March. Genesis sees sales for the period of between $62 million and $67 million, compared with the Thomson First Call consensus of $70.1 million. It expects gross margins in the quarter to be 46% to 48% and for operating expenses under standard accounting to total $26.5 million to $28 million.

"Looking to our fourth quarter, industry research is predicting seasonal declines in both of our key markets," Genesis said. "Additionally, we are expecting a moderate decrease in revenues from our TV controllers primarily due to ongoing product transitions. With respect to our LCD monitor controllers, we anticipate that planned product mix shifts will result in a decline in ASPs and revenue."

The shares recently crossed on Instinet at $17.60, down $1.63, or 8.5%.