) reported first-quarter 2013 loss of 5 cents per share, narrower
than the Zacks Consensus Estimate of 8 cents loss per share. The
adjusted earnings per share exclude one-time items but include
stock-based compensation expense. The tight operating expense
control contributed to the upside in the results.
Cypress reported revenues of $172.7 million, down 4.2%
sequentially and 6.7% year over year. However, revenues were
above management's guidance range of $163.0-$170.0 million due to
higher demand in all the segments, except the Programmable
Systems Division segment.
In the reported quarter, the book-to-bill ratio increased to
1.04 from 0.88 in the fourth quarter of 2012.
Revenues by Segment
The Programmable Systems Division (PSD) segment, which
generated 37.9% of first quarter revenues, consists of two
divisions. The first is basically the old Consumer and
Computation Division (CCD), with the TrueTouch, CapSense, and
Ovation businesses under its umbrella.
The second division comprises the core PSoC business. The
segment decreased 20.0% sequentially to $65.5 million due to
normal seasonality in CapSense and TrueTouch business.
The Memory Products Division (MPD) generated 47.6% of
revenues, up 6.0% sequentially to $82.2 million driven by nDP and
Async. This existing division continues to focus on four SRAM
business units, general-purpose programmable clocks and process
The Data Communication Division (DCD) generated 13.2% of
revenues, up 13.0% sequentially to $22.7 million due to strength
in the USP area and slight growth in Trackpads. This division has
been realigned to focus solely on USB controllers, Wireless USB
and West Bridge peripheral controllers for handsets, PCs and
The Emerging Technology Division (ETD) generated the remaining
1.3% of revenues, amounting to $2.2 million, up 75.0%
sequentially. This start-up segment includes Cypress AgigA Tech
Inc., Deca Technologies Inc., and all majority-owned subsidiaries
of Cypress. The ETD division also includes the foundry business
and other development-stage activities.
Reported gross margin for the quarter was 45.8%, down 380
basis points (bps) from the year-ago quarter's 49.6%. The
decrease was due to unfavorable product mix, higher factory
absorption charges and inventory reserves related to the Ramtron
Operating expenses of $94.7 million decreased 12.7% year over
year from $108.5 million in the year-ago quarter. Reported
operating margin was (16.9%), down 740 bps from the year-ago
quarter of (9.5%). Research and development (R&D) expenses
increased as a percentage of sales whereas selling, general and
administrative (SG&A) expenses declined.
The quarter's GAAP net loss was $28.2 million or loss per
share of 19 cents versus $19.5 million or 13 cents in the
comparable quarter last year. Excluding special items but
including stock-based compensation expense, non-GAAP net loss was
$77.8 million or loss per share of 5 cents compared with loss per
share of 7 cents in the year-ago quarter.
Cypress exited the first quarter with cash, cash equivalents
and short-term investments of approximately $101.6 million, down
from $117.2 million in the prior quarter. Trade receivables were
$132.6 million, up from $82.9 million in the prior quarter.
During the quarter, cash flow from operations was
approximately $8.3 million, down from $18.7 million in the
previous quarter. The company bought back just under 5 million
shares and also paid quarterly dividend worth $15.8 million.
Management expects second quarter 2013 revenues in the range
of $178.0-$186.0 million (up 3%-8% sequentially), driven by
seasonality and new customer ramps in PSD, with Touch and
CapSense being the biggest beneficiaries. MPD is also expected to
increase slightly in the second quarter.
Gross margin is expected to remain flat at 51%, which will
vary with manufacturing product mix. Operating expenses are
expected in the range of $79.0-$80.0 million while non-GAAP
earnings per share are likely to be in the range of 6 cents-8
Cypressis a semiconductor company, offering high-performance,
mixed signal, programmable solutions. The company delivered a
decent first quarter with a narrower-than-expected loss.
In the quarter, company bookings increased across all
divisions, indicating improving economy. Also, the company guided
higher revenues due to improving demand trends.
Though a weak and uncertain macro environment and increased
pricing pressure remain concerns, we are optimistic on the stock
given the company's advanced technology, momentum in new
products, increased customer wins and growth initiatives.
Cypress has a Zacks Rank #1 (Strong Buy).
Investors should look out for some other stocks that are
slated to report this earnings season with positive Zacks Rank
and Expected Surprise Prediction or ESP (Read:
Zacks Earnings ESP: A Better Method
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