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Cramer: Behind the sharp Xilinx decline

When shares tumble sharply single session, you can be sure Jim Cramer wants to know what's going on.

And on Wednesday Cramer wanted to know what was going on with Xilinx, the semiconductor company whose shares tumbled 14 percent in a single session.




Adam Gault | OJO Images | Getty Images

Largely these were the major issues.

1. Although net revenue for the quarter rose 6 percent to $612.63 million from $578.96 million in the same quarter last year, analysts had a consensus revenue estimate of $631.55 million for the quarter.

2. Xilinx forecast sales to be flat to down 4 percent sequentially, implying revenue of $588.12 million to $612.63 million. Analysts had expected the company to post revenue of $644.48 million for the first quarter.

"And in May the CFO said, at the RW Baird Conference, we clearly have the China thing ramping very rapidly and that will continue for another one to two years, easily. That comment made my charitable trust buy Xilinx," Cramer added. "Here we are in July and things have rapidly deteriorated."

In an attempt to find out more, Cramer went straight to the source and spoke with Xilinx CEO Moshe Gavrielov who said the lowered guidance was a question of timing.

"It's not a question of if, just a question of when. The big surprise we had was the wireless rollout in China. We expected the third round to happen earlier than it's now projected to happen and we're being cautious so we can be sure we hit it."

Cramer also asked about Xilinx weakness in the aerospace sector.

"We now have the orders from those customers and we expect to ship them this quarter so there should be a bounce back. Again, it was a question of timing," Gavrielov said.

When asked if Gavrielov would take advantage of the decline and buy his own stock, he replied, "we have a cash policy of dividends and buybacks – and we continue to buyback. I would agree this would be a good point."

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Cramer didn't say if he agreed the decline was a buy, but he did say he was impressed that the CEO spoke so candidly on television.



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