Cirrus Logic Inc.
) dropped 14.3% to $19.07 on Monday. Reportedly, the news
) new iPad Air does not include audio amplifiers manufactured by
Cirrus trigged the slide.
This development imposed gross margin pressure at Cirrus Logic
as Apple accounts for more than 80% of its revenues. However,
Cirrus continues to provide a common audio codec for both iPad
Air and the iPhone 5c.
According to one analyst, the loss of the amplifier socket
will result in a revenue loss of $30.0 to $40 million for fiscal
Cirrus reported revenues of $190.7 million in the second
quarter of 2014, down 1.6% from the year-ago quarter. The company
saw a decline in circuit breaker sales. Gross margin in the
quarter was 52.2% versus 51.7% in the year-ago quarter. However,
for the third quarter of fiscal 2014, the company expects
revenues in the range of $200 million to $220 million. Apart from
this, gross margin is expected to be between 45.0% and 47.0%.
Cirrus Logic designs and manufactures integrated circuits that
employ precision linear and advanced mixed-signal processing
technologies. The company's products enable system-level
applications in mass storage, audio and precision data
conversion. Cirrus serves a broad customer base in the mass
storage, industrial and audio markets.
Although the company increased its revenue guidance, it could
be difficult for the company to achieve its target given the
current business environment. Additionally, the current global
economic downturn might affect its business potential, going
forward. Moreover, the company is faced with competition from the
Texas Instruments Inc.
Cirrus carries a Zacks Rank #3 (Hold).
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