Cypress Semi Falls on Weak Orders - Analyst Blog
March 09 2012 - 8:50AM
Zacks
Recently, Cypress Semiconductor Corp. (CY)
slashed its revenue, gross margins and earnings guidance for the
first quarter of 2012.
The chip maker now expects sales of $180 million - $190 million,
down from its previous guidance range of $200 million to $210
million. While the sequential decline is expected to be fairly
broad-based across all divisions and most product lines, the
weakness is primarily in Computation and Consumer Division (CCD)
and Memory Products Division (MPD).
Both these business units were down sequentially in the fourth
quarter as well due to lower Touch sales and inventory adjustments
across the majority of wireless SRAM infrastructure customers.
Orders are also expected to be impacted by certain wire line and
handset customers. Though the TrueTouch family of products was the
biggest revenue generator for Cypress in 2011, they expect the
demand for touch screens to decline in the tablet market.
Additionally, Cypress sees lower-than-expected revenue from its
distribution channels due to weak business in Europe and Asia.
Cypress also reduced its gross margin guidance to a range of 53%
to 54% from its previous guidance of 54% due to lower factory
utilization rates. Earnings per share for the first quarter are
expected to be $0.08 to $0.11 versus the previous guidance of $0.15
to $0.18.
Cypress is a semiconductor company, offering high-performance,
mixed signal, programmable solutions. The company reported revenues
of $242.4 million in the fourth quarter of 2011, down 8.5%
sequentially. Earnings were down 13.5% sequentially but were above
the Street , driven by lower opex, a lower share count and a
lower-than-expected tax rate.
The company’s advanced technology and momentum in new products
has resulted in increased customer wins and management’s growth
initiatives also make us optimistic. However, the macro environment
and poor visibility related to order patterns remains a cause for
concern.
Cypress operates in a highly competitive market. In the
touch-screen market, the company competes with Atmel
Corporation (ATML) and Synaptics (SYNA).
Recently, Atmel also slashed its revenue guidance for the fourth
quarter of 2011 to $384 million versus its previous guidance of
$403 million and $422 million.
Currently, Cypress has a Zacks #3 Rank, which translates into a
short-term Hold rating.
ATMEL CORP (ATML): Free Stock Analysis Report
CYPRESS SEMICON (CY): Free Stock Analysis Report
SYNAPTICS INC (SYNA): Free Stock Analysis Report
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