Money McBags did a quick analysis of CRUS yesterday and today he was able to go through their transcript and he has to say, he was actually pretty f*cking surprised by how positive management sounded so perhaps there is still nice upside here. Below are Money McBags' takeaways from the call.
1. This company is still driven by AAPL, but sh*t, if you're going to be driven by something other than Malene Espensen, then why the f*ck not AAPL? 54% of revenues came from AAPL and they "are engaged with them on multiple new developments" their relationship continues to be "outstanding," visibility "remains excellent" and they expect to grow revenue with AAPL "substantially this year." And yes, for any CRUS shareholder that should have made their dicks hard (or for female shareholders, their pedicures dry quickly). As the AAPL relationship goes, so goes this company and while AAPL has a reputation for not letting suppliers get any kind of bargaining power over them, CRUS is still just one little f*cking socket in what AAPL does, like a tick on a whale, or a mole on Gabourey Sidibe. In theory, AAPL likes CRUS because their audio chips kick the sh*t out of the competition and there is supposedly a pretty wide gap between CRUS and their competition (though not as wide as the gap between the hotness of Mark Sanford's mistress and his cheated on wife, which explains why he eschewed his BS family values schtick like all good politicians). So as long as AAPL is concerned about quality, there is no reason for this relationship to end any time soon, that said, Money McBags does worry about pricing power even if guidance is for that to be steady.
2. There is now a tablet opportunity for their chip and this could be really exciting, like an invitation to Charlie Sheen's new house. Management was kind of coy about this on the call saying: "It is one of the ones you would want to be in. I'm not going -- we're not in all of the ones I would like to see us in the long-term but at the same time, it is definitely in one of the better names. It has got a pretty good channel. A customer we've currently got a reasonable amount of business with as well." So, umm, it certainly could be the iPad and if so, that could be a f*cking huge boost to earnings because iPads continue to sell faster than money or tickets to an Alice Eve taint tickling booth. This bears keeping an eye on (while this bears keeping two eyes on).
3. There could be some upside in the energy business, but who the f*ck really knows. This Q was hurt by their seismic business which they said on the call is always hard to forecast but picked back up at the end of the Q. They also seem to remain bullish on their power meter business, that said, they talked about a really f*cking interesting potential opportunity with their LED business. Now look, Money McBags is no engineer (though he is always happy to be first in line to run a train if need be), and he's not 100% sure of what this LED market opportunity really is, but on the call management said about the LED potential: "if you look at the landscape in the market place, sometime between now and 2015, you go from a $40 million unit kind of a market, $40 millionish to $1 or $2 billion, and so you know, we're probably not going to get 100% of that market but I don't mind splitting a billion units." So um, who doesn't like a market that is going to grow from nothing to f*cking something really interesting in four to five years. Money McBags wouldn't forecast anything from this in his numbers, but it is definitely something that could provide upside.
4. Management is kind of a bit douchey. Ok, Money McBags is sure this sounded better than it read, but CRUS' CEO said "Our biggest problems are that our largest customer is the best company in the world" and "It will be a challenge to hire enough engineers that meet our standards in order to staff everything we want to do going forward." First of all, Vivid Video is not their largest customer, so the first statement is false, but secondly, hey good for them that they are all up in AAPL's dilznik right now (and that may be an overly technical term, but whatever), but that statement reeks of the beginning of hubris and this company has nothing about which to be cocky since they have almost no control over their sales. Yeah, it was a meaningless and kind of flippant comment, but Money McBags knows the second you start getting cocky about sh*t like that and take your eye off the ball, you figuratively and literally get a dick in the face. This is what Money McBags would have liked to have heard "our biggest problem is that even though out largest customer is the best company in the world, it means we have to try even harder to diversify our revenue base and continue to raise our standards to meet that large customer's needs. Finding the talent to keep doing that will be challenging, but our goal is to continue to find success for the long-term." Was that so f*cking hard? And trust Money McBags, if he is the one coaching you on CEO-speak, you may want to take that extra management class.
5. NOLs are coming (and not just because they recently found the work of Riley Steele). This isn't that big of a deal, but it should make their GAAP financials look a bit different from now on. They are going to take a $100MM non-cash income benefit in Q4 in order to properly value their deferred tax asset and then use a 35% non-cash tax rate for.....READ THE REST AT THE AWARD WINNING WHEN GENIUS PREVAILED