Earnings Preview: Cypress Semiconductor

Cypress Semiconductor (CY) is expected to report Q2 earnings Thursday, July 17 before market open, with a conference call scheduled for 11:30 am ET.

Guidance

The consensus estimate is 21c for EPS and $539.97M for revenue, according to First Call. On its last earnings conference call, Cypress provided guidance for Q2 of 20c to 24c on revenue of $526M to $552M.

Analyst Views

Cowen expects Cypress to report Q2 revenue toward the high end of management's guidance. The firm expects the majority of the upside in the quarter to be driven by strong performance from the SunPower (SPWR) asset. Cowen expects management to highlight continued momentum from its PSoC business as well as its Westbridge Antioch controller. In terms of guidance for the September quarter, Cowen expects management to remain somewhat cautious about the prospects for the core business reflecting continued macroeconomic uncertainty while remaining more optimistic about the prospects for SunPower. Cowen expects consolidated Q3 guidance at or slightly above current consensus estimates of 26c and $561.79M in revenue.

For Q3, Citigroup is modeling SunPower to increase 4% to $354M, above current consensus of 1% or $347M. While this raises some degree of concern, a refreshed iPod line-up from Apple (AAPL) ought to benefit Cypress sales, said Citigroup. With Q3 estimates already below the seasonal 4.0%, versus normal seasonal 4.6%, and potential upside for 2Q08, Citigroup sees room for modest incremental estimate upside.

Key issues for conference call: Forward guidance; details on the expected spin off its SunPower holding in 2H08; an update on the core semiconductor business; commentary on the margin outlook; and more details regarding the CEO's recent comments at a Street conference about wanting to talk to the Board about a dividend.

Comments

[Wayfarer]

Cypress released today that they were going to distribute SPWR B shares in the second half of the year.