By RTT News, September 24, 2013, 08:54:00 AM EDT
(RTTNews.com) - Cypress Semiconductor Corp. ( CY ) on Tuesday lowered its financial outlook for the third quarter, citing greater than expected weakness in its mobile handset revenues, mainly in Asia. The company also forecast revenue for the fourth quarter to decline sequentially from its revised revenue estimate for the third quarter. Shares of the company are down more than 9 percent in pre-market trades.
Cypress Semiconductor makes the processors and chips that go into computers, phones, and other integrated electronic devices.
Brad Buss, executive vice president and chief financial officer of Cypress Semiconductor said, "We are seeing greater than expected weakness in our mobile handset revenues, mainly within Asia, due to a customer push out of certain new handset programs to Q1, as well as order reductions at various end customers in China to balance inventory levels. Unfortunately this is resulting in a negative impact to Q3 revenue that was not anticipated in our original guidance."
Accordingly, San Jose, California-based Cypress Semiconductor now forecasts loss for the third quarter in a range of $0.11 to $0.09 per share, adjusted earnings in a range of $0.10 to $0.12 per share, and consolidated revenue of $184 million to $187 million, all lower than its prior guidance.
On average, analysts polled by Thomson Reuters expect the company to report earnings of $0.17 per share for the quarter on revenues of $204.70 million. Analysts' estimates typically exclude special items.
For the fourth quarter, Cypress Semiconductor forecasts revenue to decline in a range of 9 percent to 11 percent sequentially from its revised revenue estimate for the third quarter, in-line with its typical sequential fourth-quarter decline over the last two fourth quarters. Analysts have a consensus revenue estimate of $207.33 million for the quarter.
The company expects its gross margin for the fourth quarter to decrease temporarily on lower factory utilization, and operating expenses to decline 4 percent to 6 percent sequentially due to lower variable compensation expense and continued tight operating expense management.
Buss added, "While it is very hard to forecast the fourth quarter at this time, we believe the following trends will impact the fourth quarter: first, continued weakness in TrueTouch, specifically in mobile handsets, due to seasonal declines, customer program delays and end-of-life actions; second, the expected year-end inventory adjustments at certain end customers; and finally, slightly lower communications revenue impacting our Memory Products Division."
CY closed Monday's trading at $11.44. In Tuesday's pre-market, the stock is down $1.10 or 9.65 percent to $10.34.
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