--Cirrus Logic shares soar following strong guidance for the
second half of 2012
--Chip maker counts Apple as its biggest customer
--Analysts say bullish view can indicate a new iPhone and
potential mini iPad
(Adds analysts' comments in 13th to 15th paragraphs.)
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).
Cirrus Logic, which makes audio and energy chips for smartphones
and other devices, late Monday said its revenue should surge 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 23% to $36.76 in recent trading,
and they have more than doubled in value over the past 12 months.
Apple shares were up 2.5% to $609.59 in recent trading and have
gained 56% over the past 12 months.
Cirrus on 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's
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's fiscal
2013 growth has likely increased.
"Investors should likely 'pay up' for [Cirrus's] 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.
Apple wasn't immediately available to comment.
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's 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 for the launch of the
new phone, and there is speculation Apple also will release a mini
iPad at that time.
Cirrus's bullish guidance could lend weight to expectations for
a smaller iPad, Raymond James analyst Tavis McCourt said. Some of
Apple's other suppliers--such as Qualcomm Inc. (QCOM), TriQuint
Semiconductor Inc. (TQNT) and Skyworks Solutions Inc.
(SWKS)--didn't provide as strong guidance, which Mr. McCourt said
in part could be because WiFi-only tablets largely don't use their
components. A smaller iPad would include "meaningful Cirrus
content," he said.
"In our opinion, the Cirrus guidance does not guarantee an
iPhone 5 launch in September, but it certainly guarantees large
builds for a commercial launch when it comes and likely guarantees
a meaningful 7-inch iPad/iPod launch as well," Mr. McCourt
noted.
TriQuint shares recently climbed 4.6% to $5.64, while Skyworks
grew 7.9% to $30.04. Qualcomm edged up 1.5% to $60.02.
Meanwhile, Barclays Capital analyst C.J. Muse said the strong
top-line guidance confirms his belief that iPhone 5 production is
well under way. He said 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% to $9.73.
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 of 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.
Write to Shara Tibken at shara.tibken@dowjones.com
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