Cirrus Logic dives post-earnings; Apple dependance, margins in focus

Though Cirrus Logic's (CRUS -13.6%) FQ2 results beat estimates and the company's FQ3 revenue guidance is largely above consensus, shares are seeing huge losses. With FQ3 representing Cirrus' seasonally strongest quarter and Apple having issued solid top-line guidance, investors were looking for a stronger forecast.

Also: Cirrus is guiding for an FQ3 gross margin of 45%-47%, down from 52% in FQ2 (boosted by an inventory sale) and 51% in the year-ago period.

Barclays has cut shares to Underweight: The firm sees a major seasonal revenue drop in calendar Q1, doesn't see any signs Cirrus' dependance on Apple (believed to make up over 80% of sales) diminishing much, and is concerned about lower ASPs and Apple's slowing growth. Sidoti has cut shares to neutral.

In its FQ2 shareholder letter, Cirrus said its relationship with Apple (never referred to by name) "remains outstanding," and that design activity is "robust." Cirrus also said it added another smartphone customer, and that it's shipping four ADCs to a U.S. smartphone OEM (could be Motorola). However, energy chip sales fell Q/Q in spite of rising LED IC sales.

Several mobile chipmakers have issued below-consensus calendar Q4 guidance (I, II, III). Audience (ADNC -5.2%) is following Cirrus lower.

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Comments (5)
  • berniespear
    , contributor
    Comments (251) | Send Message
    lame. oh well buy and hold
    30 Oct 2013, 02:55 PM Reply Like
  • Piero A.
    , contributor
    Comments (333) | Send Message
    It's a shame that after a good earnings report and guidance that some nobody analyst can come in and have such an impact. I've never seen anything like this before. A 14% sell off in one day is not justified. I'm sure the stock will recover tomorrow. If it falls further I will add to my position.
    30 Oct 2013, 04:37 PM Reply Like
  • Hugo A. St. John III
    , contributor
    Comments (67) | Send Message
    I agree completely! Not to self-promote (OK, just a little), but if you read this ( and then my response to the third comment, it'll make more sense what these analysts are up to. In my opinion, analysts have unrealistic expectations given their time horizons, which are much more short-lived and truncated in comparison to investors like us.
    31 Oct 2013, 02:45 PM Reply Like
  • Independent Analyst
    , contributor
    Comments (44) | Send Message
    There's a reason most analysts don't post their historical performance in their upgrade / downgrade history, because they aren't required to and if they did post history people would see poor performance and no one would listen to them LOL. Not to mention there are other reasons not to listen too closely to analysts (like potential conflict of interest within a firm ). Do your own DD, most analysts I've tracked are historically weak in their upgrade downgrade timing. if you start tracking yourself over time you'll find their performance is often very weak!!! CRUS fundamentally sound and good value / growth, only downside is not as much client diversification as one might like, but little to no danger of losing Apple -- for multiple reasons (won't go into here, too long). Will buy on this dip based on fundamentals and projections over analysts, especially those that don't post their historical upgrade / downgrade performance :-). My opinion only, as always do your DD and take more comfort in your own assessment than those of others that may have various motives.
    30 Oct 2013, 06:40 PM Reply Like
  • Hugo A. St. John III
    , contributor
    Comments (67) | Send Message
    Sounds like we're aligned, but I'd like to get your thoughts if so because it seems you've done your DD here, as have I! Feedback welcome:
    31 Oct 2013, 02:47 PM Reply Like
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