reported that Technoid Inc. posted record 2004 fourth-quarter results. Despite $21.5 million in losses from the December 2003 currency devaluation in a key foreign market

reported that Technoid Inc. posted record 2004 fourth-quarter results. Despite $21.5 million in losses from the December 2003 currency devaluation in a key foreign market and losses on currency hedging, earnings grew to $0.91 per share from $0.59 in the same quarter of 2003 on a revenue growth of 49%. Furthermore, Technoid captured the leading market share position, with shipments up 50% from 2003 and with a slightly higher profit margin. Nevertheless, on the same day, Technoid’s share price fell by $5.50, a decline of about 13%. reported that analysts had been expecting earnings of about $0.96 per share. Also, there were concerns about Technoid’s scheduled introduction of new products in March 2005 following a warning by Technoid’s CEO that first-quarter, 2005 earnings were likely to be “flat.” Required c. quoted an analyst as stating “the market overreacted.” Use prospect theory to explain why the market might overreact to less-than-expected earnings news.