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

|By:, SA News Editor

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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