Christopher Danely, an analyst with J.P. Morgan, asserted in a research note Friday that Cypress Semiconductor (NASDAQ:CY) is likely to report profits for the fourth quarter short of the Street consensus and the company’s own guidance. Danely notes that the company forecast $285 million to $293 million in revenue and pro forma profits of 15-16 cents a share. He thinks the company is going to come in at the bottom of the revenue range, right at $285 million, with pro forma profits of 8 cents. (The consensus view is for $289 million in revenue and profits of 15 cents.)
Danely says that visibility at the company has deteriorated, with the book-to-bill ratio down to 0.95 in the third quarter from 1.12 in the second quarter, and lead times shortening for the company’s SRAM memory chips. He writes that demand for parts from the company’s computation and consumer division has declined from the third quarter after seasonal builds in gaming, PCs and digital TVs, while its data communications division “continues to experience weakness in the base-station end market."
For the first quarter, Danely thinks Cypress will see continued weakness in the SRAM and consumer markets. He thinks the company will guide to $275 million in revenue and 11 cents a share ex options, below the current consensus of $286.8 million and 14 cents.
Cypress was down 12 cents Friday at $17.89.
CY 1-yr chart