Silicon Motion Technology Corporation SIMO reported second-quarter adjusted earnings of 71 cents per American Depositary Share (ADS), which declined 17.4% from the year-ago quarter but increased 1.4% sequentially.Including stock-based compensation, earnings were 69 cents per share, which missed the Zacks Consensus Estimate of 73 cents.Net sales decreased 5.7% year over year but increased 4.2% from the previous quarter to $132.7 million. The figure also missed the Zacks Consensus Estimate of $136 million. Revenues were also below the guided range of $134-$140 million. Silicon Motion noted that NAND supply continues to remain tight, which affected module maker customers, hyperscale customers, and NAND flash partners in the quarter. This negatively impacted top-line growth. Management expects NAND supply constraints to impact second-half 2017 sales as well.The company has gained 5.7% year-to-date, underperforming the 27.6% rally of the industry it belongs to.Segment SalesSales from mobile storage products (which include Embedded Storage as well as Expandable Storage products) decreased 6% year over year but increased 4% quarter over quarter to 1.6 million. It constituted 92% of revenues.Client SSD controller sales declined almost 10% sequentially. However, eMMC controller sales increased 5% sequentially.SSD solutions sales increased over 50% driven by strong growth from Shannon hyperscale SSDs and Ferri industrial SSDs.Mobile communications product (which include mobile TV SoCs and handset transceivers) sales were $10 million and represented 7% of the total revenue.Silicon Motion Technology Corporation Price, Consensus and EPS Surprise Silicon Motion Technology Corporation Price, Consensus and EPS Surprise | Silicon Motion Technology Corporation QuoteOperational DetailsNon-GAAP gross margin expanded more than 30 basis points (bps) on a year-over-year basis but declined 220 bps sequentially to 48.7%. This was within management’s guided range of 48.5–55.5%. The sequential decrease was primarily attributed to the difference between SSD pricing agreement with customers and subsequent NAND component price rise.Operating margin decreased 260 bps on year-over-year basis and 250 bps sequentially to 23.9%, lower than the guided range of 25.5%–27.5%.Liquidity & Cash FlowExiting the quarter, Silicon Motion’s cash and cash equivalents were $303.6 million, up from $302.4 million as of Mar 31, 2017.GuidanceFor third-quarter 2017, Silicon Motion expects non-GAAP sales to be in the range of $122–$129 million, reflecting 3%–8% decline on a sequential basis.Non-GAAP gross margin is anticipated within 45%–47%, reflecting higher NAND costs. Moreover, operating margin is projected in the range of 19%–21% for third-quarter 2017. Operating expenses are anticipated to be similar to the figure reported in the first quarter.For full-year 2017, Silicon Motion anticipates revenues to decrease 5–8% from 2016 to $512–$528 million.For the full-year, client SSD controller is anticipated to be flat. Moreover, eMMC and SSDs solutions are also expected to be down.For full-year 2017, non-GAAP gross margin is anticipated within 47.5%–49%, while operating margin is projected in the range of 22%–24%.The disappointing guidance is based on the company’s anticipation that NAND supply constraint will continue, which will hurt the company’s top line as well as margin growth.Zacks Rank & Key PicksCurrently, Silicon Motion carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Better-ranked stocks in the industry are Alibaba Group Holding Limited BABA, and Applied Optoelectronics, Inc. AAOI, both sporting a Zacks Rank #1, and Symantec Corp. SYMC with Zacks Rank #2 (Buy).Long-term earnings growth rates for Alibaba Group, Applied Optoelectronics and Symantec are projected to be 28.9%, 18.7% and 10.3%, respectively.More Stock News: Tech Opportunity Worth $386 Billion in 2017From driverless cars to artificial intelligence, we've seen an unsurpassed growth of high-tech products in recent months. Yesterday's science-fiction is becoming today's reality. Despite all the innovation, there is a single component no tech company can survive without. Demand for this critical device will reach $387 billion this year alone, and it's likely to grow even faster in the future.Zacks has released a brand-new Special Report to help you take advantage of this exciting investment opportunity. Most importantly, it reveals 4 stocks with massive profit potential.See these stocks now>>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Alibaba Group Holding Limited (BABA): Free Stock Analysis Report Symantec Corporation (SYMC): Free Stock Analysis Report Silicon Motion Technology Corporation (SIMO): Free Stock Analysis Report Applied Optoelectronics, Inc. (AAOI): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research