Cypress Semiconductor Corporation
) reported fourth-quarter 2012 loss of 2 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 earnings.
Cypress reported revenues of $180.3 million, down 11.2%
sequentially and 25.6% year over year due to sluggish demand in
all the segments. Revenues were above the management's
preliminary guidance range of $177.0-$179.0 million.
In the reported quarter, the book-to-bill ratio increased to
0.88 from 0.81 in the third quarter.
Revenues by Segment
The Programmable Systems Division (PSD) segment, which
generated 47.2% of fourth quarter revenue, consists of two
divisions. The first is basically the old Consumer and
Computation Division (CCD) segment, which has the TrueTouch,
CapSense, Trackpads and Ovation businesses under its umbrella.
The second division comprises the core PSoC business. The segment
decreased 9.1% sequentially to $85.1 million due to normal
seasonality in CapSense and lower PSoC and handset revenues,
partially offset by little growth in Trackpads.
The Memory Products Division (MPD) segment generated 42.9% of
revenue, down 12.3% sequentially due to lower-than-expected
static random access memory (SRAM) revenue. This existing
division continues to focus on four SRAM business units,
general-purpose programmable clocks and process technology
The Data Communication Division (DCD) segment generated 9.2%
of revenue, down 12.2% sequentially due to weak PC market and
lower wireless revenues. This division has been realigned to
focus solely on USB controllers, Wireless USB and West Bridge
peripheral controllers for handsets, PCs and tablets.
The Emerging Technology Division (ETD) segment generated the
remaining 0.7% of revenue, amounting to $1.3 million, down 43.5%
Reported gross margin for the quarter was 46.4%, down 720
basis points (bps) from the year-ago quarter's 53.6%. The
decrease was due to unfavorable product mix, higher factory
absorption charges, lower utilization and inventory reserves
related to Ramtron acquisition.
Operating expenses of $98.6 million decreased 3.3% year over
year from $102.0 million in the year-ago quarter. Reported
operating margin was (11.0%), down significantly from the
year-ago quarter. Research and development (R&D) expenses
increased as a percentage of sales, as did selling, general and
administrative (SG&A) expenses.
The quarter's GAAP net loss was $24.2 million or loss per
share of 17 cents, down from $31.7 million or 18 cents in the
comparable quarter last year. Excluding special items but
including stock-based compensation expense, non-GAAP net loss was
$43.1 million or loss per share of 2 cents compared with earnings
per share of 18 cents in the year-ago quarter.
Cypress exited the fourth quarter with cash, cash equivalents
and short-term investments of approximately $117.2 million, down
from $219.4 million in the prior quarter. Trade receivables were
$82.9 million, down from $125.2 million in the prior quarter.
During the quarter, cash flow from operations was over $18.7
million, down from $58.1 million in the previous quarter. The
company bought back 3.2 million shares of common stock for $32.3
million and also paid a quarterly dividend of $16.1 million.
Management expects first quarter 2013 revenue in the range of
$163.0-$170.0 million (down 5%-9% sequentially) due to regular
seasonality in PSD. MPD and DCD divisions will be flat to
slightly down sequentially. The gross margin is expected to
remain flat at 51%, which will vary with manufacturing product
mix. Operating expenses are expected in the range of $82.0-$83.0
Cypressis a semiconductor company, offering high-performance,
mixed signal, programmable solutions. The company delivered a
decent fourth quarter as it posted a narrower-than-expected
In the quarter, company bookings increased across all
divisions, indicating improving economy. However, the company
guided lower revenue due to weak macro environment.
The company's advanced technology, momentum in new products,
increased customer wins and growth initiatives make us
optimistic. However, a weak and uncertain macro environment and
increased pricing pressure remain causes for concern.
Cypress has a Zacks Rank #5 (Strong Sell).
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
) has a Zacks Rank #1 (Strong Buy) with an ESP of +14.8%.
) has a Zacks Rank #2 (Buy) with an ESP of +1.9%.
) has a Zacks Rank #2 (Buy) with an ESP of +350.0%.
BROADCOM CORP-A (BRCM): Free Stock Analysis
CYPRESS SEMICON (CY): Free Stock Analysis
INTERDIGITL INC (IDCC): Free Stock Analysis
YAHOO! INC (YHOO): Free Stock Analysis Report
To read this article on Zacks.com click here.