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Cypress Semiconductor (CY) Beats Earnings Estimates in Q1
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Cypress Semiconductor Corp. reported adjusted first-quarter 2016 earnings of 8 cents per share, beating the Zacks Consensus Estimate by 6 cents. Adjusted earnings exclude one-time items but include stock-based compensation expense.
Cypress witnessed strength across most of its end markets, particularly from IoT and Automotive. In fact, Automotive remained the strongest end market in the first quarter with record revenue in design-in activity. It grew 6% and now accounts for 33% of Cypress’ total revenue.
Also, during the quarter, design win momentum and market share gains continued. NOR memory was better than expected.
However, a weak and uncertain macro environment, limited visibility and intensifying competition are nagging concerns.
Talking about the share price, in the last one year, shares of Cypress were more or less in-line with the Zacks categorized Semiconductor Communications industry. While the industry gained 44%, the stock returned 43.9%.
The Numbers in Detail
Revenues
Cypress reported non-GAAP revenues of $532 million, up 0.3 sequentially and 25.1% year over year. Revenues were above management’s guided range of $495–$525 million and ahead of the Zacks Consensus Estimate of $509 million.
Revenue growth was driven by strength across end markets, particularly from IoT and Automotive. Automotive remained the strongest end market in the first quarter with record revenues in design-in activity. Also, NOR memory was better than expected.
Revenues by Business Units
Last year, the company reorganized its reporting structure into two divisions. These divisions are Microcontroller and Connectivity Division (MCD) and Memory Products Division (MPD).
Notably, MCDincludes Microcontroller and PSoC product lines of the former Programmable Systems Division, Wireless Connectivity/IoT and USB product lines of the former Data Communications Division, the foundry business from the former Emerging Technologies Division (ETD) and the Intellectual Property Business Unit, which was formerly part of the Memory Products Division.
Revenues from this segment increased 8% sequentially to 317.9 million, driven by strong growth in the wireless connectivity business and automotive microcontrollers. Revenue in the wireless connectivity business, which includes the IoT assets acquired from Broadcom last year, increased 30% sequentially.
The other division, MPD,includes Flash, SRAM and specialty memories, as well as the AgigA Tech subsidiary, which was formerly part of ETD. Revenues from this segment decreased 9% sequentially to $214 million. However, the performance in this segment was better than the company’s expectations, driven by strength in the NOR market. However, overall MPD was up 1% year over year.
Operating Results
Gross margin was 39.3%, down 80 basis points (bps) sequentially. The decrease was mainly because of an unfavorable mix.
Operating expenses (research & development and selling, general & administrative) of $164.6 million decreased 2.6% sequentially. Also, as a percentage of sales, both research and development expenses as well as selling, general and administrative expense decreased.
GAAP net loss was $45.8 million or loss of 14 cents per share against net loss of $72.4 million or loss per share of 22 cents in the previous quarter. Non-GAAP earnings per share came in at 8 cents compared with a break even in the previous quarter.
Balance Sheet
Cypress exited the quarter with cash, cash equivalents and short-term investments of approximately $122.5 million compared with $121.1 million last quarter. Trade receivables were $317.3 million, down from $333 million in the previous quarter. Net inventory was $325 million, up from $287.8 million in the previous quarter.
During the quarter, Cypress’ cash flow from operations was approximately $25.7 million and capex was $13.8 million. The company also paid quarterly dividend of $35.5 million or 11 cents per share.
Q2 Guidance
Management expects second-quarter 2017 revenues in the range of $530–$560 million. The Zacks Consensus Estimate is pegged at $530.9 million.
Consolidated GAAP gross margin is expected to be roughly in the range of 38.5–39.5%, depending on utilization, product and customer mix. Pro forma gross margin is expected at roughly 40% to 41%.
GAAP loss per share are expected in the range of 9 cents to 13 cents. Pro forma earnings per share are expected in the range of 14 cents to 18 cents. The Zacks Consensus Estimate is pegged at 8 cents.
Cypress Semiconductor Corporation Price and EPS Surprise
Lam Research delivered a positive earnings surprise of 6.14%, on average, in the trailing four quarters.
KLA-Tencor delivered a positive earnings surprise of 11.55%, on average, in the last four quarters.
Applied Materials delivered a positive earnings surprise of 3.92%, on average, in the trailing four quarters.
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Cypress Semiconductor (CY) Beats Earnings Estimates in Q1
Cypress Semiconductor Corp. reported adjusted first-quarter 2016 earnings of 8 cents per share, beating the Zacks Consensus Estimate by 6 cents. Adjusted earnings exclude one-time items but include stock-based compensation expense.
Cypress witnessed strength across most of its end markets, particularly from IoT and Automotive. In fact, Automotive remained the strongest end market in the first quarter with record revenue in design-in activity. It grew 6% and now accounts for 33% of Cypress’ total revenue.
Also, during the quarter, design win momentum and market share gains continued. NOR memory was better than expected.
However, a weak and uncertain macro environment, limited visibility and intensifying competition are nagging concerns.
Talking about the share price, in the last one year, shares of Cypress were more or less in-line with the Zacks categorized Semiconductor Communications industry. While the industry gained 44%, the stock returned 43.9%.
The Numbers in Detail
Revenues
Cypress reported non-GAAP revenues of $532 million, up 0.3 sequentially and 25.1% year over year. Revenues were above management’s guided range of $495–$525 million and ahead of the Zacks Consensus Estimate of $509 million.
Revenue growth was driven by strength across end markets, particularly from IoT and Automotive. Automotive remained the strongest end market in the first quarter with record revenues in design-in activity. Also, NOR memory was better than expected.
Revenues by Business Units
Last year, the company reorganized its reporting structure into two divisions. These divisions are Microcontroller and Connectivity Division (MCD) and Memory Products Division (MPD).
Notably, MCDincludes Microcontroller and PSoC product lines of the former Programmable Systems Division, Wireless Connectivity/IoT and USB product lines of the former Data Communications Division, the foundry business from the former Emerging Technologies Division (ETD) and the Intellectual Property Business Unit, which was formerly part of the Memory Products Division.
Revenues from this segment increased 8% sequentially to 317.9 million, driven by strong growth in the wireless connectivity business and automotive microcontrollers. Revenue in the wireless connectivity business, which includes the IoT assets acquired from Broadcom last year, increased 30% sequentially.
The other division, MPD,includes Flash, SRAM and specialty memories, as well as the AgigA Tech subsidiary, which was formerly part of ETD. Revenues from this segment decreased 9% sequentially to $214 million. However, the performance in this segment was better than the company’s expectations, driven by strength in the NOR market. However, overall MPD was up 1% year over year.
Operating Results
Gross margin was 39.3%, down 80 basis points (bps) sequentially. The decrease was mainly because of an unfavorable mix.
Operating expenses (research & development and selling, general & administrative) of $164.6 million decreased 2.6% sequentially. Also, as a percentage of sales, both research and development expenses as well as selling, general and administrative expense decreased.
GAAP net loss was $45.8 million or loss of 14 cents per share against net loss of $72.4 million or loss per share of 22 cents in the previous quarter. Non-GAAP earnings per share came in at 8 cents compared with a break even in the previous quarter.
Balance Sheet
Cypress exited the quarter with cash, cash equivalents and short-term investments of approximately $122.5 million compared with $121.1 million last quarter. Trade receivables were $317.3 million, down from $333 million in the previous quarter. Net inventory was $325 million, up from $287.8 million in the previous quarter.
During the quarter, Cypress’ cash flow from operations was approximately $25.7 million and capex was $13.8 million. The company also paid quarterly dividend of $35.5 million or 11 cents per share.
Q2 Guidance
Management expects second-quarter 2017 revenues in the range of $530–$560 million. The Zacks Consensus Estimate is pegged at $530.9 million.
Consolidated GAAP gross margin is expected to be roughly in the range of 38.5–39.5%, depending on utilization, product and customer mix. Pro forma gross margin is expected at roughly 40% to 41%.
GAAP loss per share are expected in the range of 9 cents to 13 cents. Pro forma earnings per share are expected in the range of 14 cents to 18 cents. The Zacks Consensus Estimate is pegged at 8 cents.
Cypress Semiconductor Corporation Price and EPS Surprise
Cypress Semiconductor Corporation Price and EPS Surprise | Cypress Semiconductor Corporation Quote
Zacks Rank and Stocks to Consider
Currently, Cypress carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the industry are Lam Research (LRCX - Free Report) and KLA-Tencor (KLAC - Free Report) , each carrying a Zacks Rank #1 (Strong Buy), while Applied Materials (AMAT - Free Report) , carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Lam Research delivered a positive earnings surprise of 6.14%, on average, in the trailing four quarters.
KLA-Tencor delivered a positive earnings surprise of 11.55%, on average, in the last four quarters.
Applied Materials delivered a positive earnings surprise of 3.92%, on average, in the trailing four quarters.
5 Trades Could Profit ""Big-League"" from Trump Policies
If the stocks above spark your interest, wait until you look into companies primed to make substantial gains from Washington's changing course.
Today Zacks reveals 5 tickers that could benefit from new trends like streamlined drug approvals, tariffs, lower taxes, higher interest rates, and spending surges in defense and infrastructure. See these buy recommendations now >>