Why are Lattice Semiconductor (LSCC) shares falling today?

What happened:

Shares of semiconductor designer Lattice Semiconductor ( NASDAQ:LSCC ) fell 15.4% in the morning session after the company announced that president and CEO Jim Anderson is stepping down to pursue new opportunities. Esam Elashmawi, Chief Marketing and Strategy Officer, will succeed him as interim CEO with immediate effect.

An update from Coherent (NYSE: COHR), another semiconductor company, revealed that Jim Anderson will be its new CEO.

According to the press release, the Lattice Board of Directors has begun the search process for a permanent CEO and will consider internal and external candidates. The market is likely concerned about the sudden departure of the CEO as it creates an atmosphere of uncertainty, resulting in the company’s stock falling.

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What the market tells us:

Lattice Semiconductor stock has been somewhat volatile, with 17 moves greater than 5% over the last year. However, such large moves are very rare even for Lattice Semiconductor, which tells us that this news has had a significant impact on the market’s perception of this company.

The biggest move we’ve reported on over the past year was 7 months ago, when the company’s shares fell 13.7% on news that the company had announced third-quarter earnings and revenue guidance for the next quarter was about 10% lower from Wall Street expectations before the quarter’s publication. Lattice explained that the weak revenue forecast is due to reduced demand for communications infrastructure in Europe, as well as in industrial and automotive markets in Europe and Asia. Although management believes in the long-term potential of its products, it cited high interest rates as a factor dampening demand in the near future. In response to the earnings release, management added that distributor and large end-customer inventories remained healthy (high inventory levels could mean fewer future orders), but the market appeared somewhat skeptical.

On the other hand, revenues and EPS were better than Wall Street estimates, although the declines were not very large. Overall the results could have been better.

Year-to-date, Lattice Semiconductor is down 7.2% and is trading at $63.47 per share, down 34.7% from its 52-week high of $97.26 in August 2023. Investors, who purchased Lattice Semiconductor stock for $1,000 5 years ago would now be looking at an investment of $4,954.

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