They say that good things come in small packages.

While that might be true of AuthenTec's fingerprint sensors, it sure wasn't true with the nice little "Business Update" that AuthenTec provided on Sunday evening or their nice little share price after the close of today's market.

AuthenTec (NASDAQ: AUTH), the world’s leading provider of fingerprint sensors and solutions to the PC, Wireless and Access Control markets, dropped a bombshell on all of us late Sunday night in announcing that they were lowering Q3/2008 and full year revenue and earnings forecasts, as well as announcing the loss of a customer that will represent over 35% of their revenue in 2008 and 2009.

In addition, AuthenTec held a conference all with analysts on Monday morning before the market opened to discuss the lowered forecast as well as the customer loss, in what is a highly unusual occurrence, which shows the severity of the situation.

Needless to say, Wall Street was none too pleased sending shares down over 60%, and frankly, neither am I.

What this calls into question now is our investment thesis.

Has it changed such that an investment in AuthenTec is no longer warranted?

What follows is a summary of AuthenTec's "Business Update", conference call highlights, and my take on the company's future prospects, and my investing thesis.