By Shara Tibken
Cirrus Logic Inc.'s (CRUS) bullish growth targets for the back
half of the calendar year sent shares soaring Tuesday and
heightened anticipation for new devices from major customer Apple
Inc. (AAPL).
The company, which makes audio and energy chips for smartphones
and other devices, late Monday said its revenue should soar about
70% to 90% sequentially in the current period and again grow
significantly in the December quarter. The company, whose guidance
was much better than analysts anticipated, is benefiting in
particular from its position as a major audio chip supplier to
Apple.
"Across the board we're seeing some great things for the devices
we've developed in the past year," Chief Executive Jason Rhode said
during a conference call, according to a FactSet transcript.
The news sent Cirrus shares up 22% to $36.37 in recent trading,
more than doubling over the past 12 months. Apple grew 2.1% to
$607.38, up 55% over the same period.
Cirrus Monday projected revenue of $170 million to $190 million
in the fiscal second quarter, well above the first quarter's $99
million and the $130 million estimated by analysts, according to
Thomson Reuters. Its fiscal first-quarter results were largely in
line with expectations.
Capstone Investments analyst Jeff Schreiner said Cirrus'
September quarter guidance likely "left many with their jaws
hanging wide open." He added that with Apple's product launches
moving closer in coming months, visibility into Cirrus' fiscal 2013
growth has likely increased.
"Investors should likely 'pay up' for [Cirrus'] near-term
growth, as potential for revisions higher still remain in place,"
Mr. Schreiner said.
Cirrus took pains to avoid talking about Apple during its
conference call. The company derives more than half of its revenue
from Apple, but it doesn't discuss the partnership or even mention
Apple's name during its earnings calls, simply referring to the
consumer electronics giant as a major customer.
"While we understand there is intense market interest related to
our largest customer, in accordance with our policy, we do not
discuss specifics about our business relationship," Mr. Rhode
said.
Nevertheless, analysts consider Cirrus to be a gauge on Apple
device production and a way to gain exposure to Apple without
actually buying the Cupertino, Calif., company's shares. On
Tuesday, the analysts took Cirrus' bullish guidance as an
indication of ramped-up business at Apple, as the company prepares
to release a new iPhone.
Media reports Monday pegged mid-September as the launch date for
the new phone. And there is speculation Apple also will be
releasing a mini-iPad at that time.
Barclays Capital analyst C.J. Muse said the strong top-line
guidance confirms his belief that iPhone 5 production is well under
way. He noted that should ease investor concerns on the near-term
outlook for other semiconductor companies tied to Apple, such as
MagnaChip Semiconductor Corp. (MX). MagnaChip's shares recently
jumped 8.3% to $9.75.
And Topeka Capital Markets analyst Brian White noted it will be
tough for Apple investors to ignore the big fiscal second-quarter
outlook from Cirrus. He said the midpoint of guidance represents an
82% sequential rise and is well above the average 23% sequential
growth for September quarters over the past five years.
"In fact, this represents the biggest sequential sales uptick
for Cirrus Logic that we have on record," for the past 10 years Mr.
White noted. He added it could indicate Cirrus chips are being used
in a new product, such as a mini-iPad, along with the iPhone.
Write to Shara Tibken at shara.tibken@dowjones.com
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