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Shares of Cirrus Logic Inc. (CRUS - Snapshot Report) dropped 14.3% to $19.07 on Monday.  Reportedly, the news that Apple’s (AAPL - Analyst Report) new iPad Air does not include audio amplifiers manufactured by Cirrus trigged the slide.

This development imposed gross margin pressure at Cirrus Logic as Apple accounts for more than 80% of its revenues. However, Cirrus continues to provide a common audio codec for both iPad Air and the iPhone 5c.

According to one analyst, the loss of the amplifier socket will result in a revenue loss of $30.0 to $40 million for fiscal 2014.

Cirrus reported revenues of $190.7 million in the second quarter of 2014, down 1.6% from the year-ago quarter. The company saw a decline in circuit breaker sales. Gross margin in the quarter was 52.2% versus 51.7% in the year-ago quarter. However, for the third quarter of fiscal 2014, the company expects revenues in the range of $200 million to $220 million. Apart from this, gross margin is expected to be between 45.0% and 47.0%.

Cirrus Logic designs and manufactures integrated circuits that employ precision linear and advanced mixed-signal processing technologies. The company's products enable system-level applications in mass storage, audio and precision data conversion. Cirrus serves a broad customer base in the mass storage, industrial and audio markets.

Although the company increased its revenue guidance, it could be difficult for the company to achieve its target given the current business environment. Additionally, the current global economic downturn might affect its business potential, going forward. Moreover, the company is faced with competition from the likes of Texas Instruments Inc. (TXN - Analyst Report) and STMicroelectronics NV (STM - Snapshot Report).

Cirrus carries a Zacks Rank #3 (Hold).

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