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Cypress Semiconductor (CY) Beats on Q4 Earnings and Revenues
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Cypress Semiconductor Corp. reported fourth-quarter 2017 earnings per share of 28 cents, which beat the Zacks Consensus Estimate by 3 cents and improved 86.7% from the year-ago quarter.
The company reported non-GAAP revenues of $597.5 million, which beat the Zacks Consensus Estimate of $594 million. The figure was within the guided range of $575-$610 million and improved 12.7% on a year-over-year basis.
The robust top-line growth can be primarily attributed to improvement in automotive, IoT wireless connectivity and USB-C solutions.Driven by growth of these segments, the company has been performing well for quite some time.
The company returned 34.9% in the past year, while the industry grew 38.9% over the same time frame.
Revenues by Business Units
In 2016, the company reorganized its reporting structure into two divisions. These divisions are Microcontroller and Connectivity Division (MCD) and Memory Products Division (MPD).
Notably, MCD includes 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 MCD improved 21% year over year to $357.2 million backed by strong growth in wired connectivity driven by expanding USB-C customers. Seasonality in wireless connectivity led to a sequential decline of 4%. This segment accounted for 59.8% of fourth-quarter revenues. The company’s IoT wireless connectivity increased 46% from the year-ago quarter.
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, which accounted for the remaining 40.2% of fourth-quarter revenues, increased 4% sequentially and 4% year over year to $240.3 million, driven by increasing demand in the flash memory market.
In 2017, the company’s MCU products increased 11% year over year. The company noted that the adoption of 802.11ac and Bluetooth into emerging IoT platforms bode well for the company’s growth in the near term.
Cypress’ USB-C product continues to witness rapid penetration. The company’s wired connectivity revenue increased 70% in 2017 driven by high adoption of USB-C. Coming to the numbers, 120 unique models of PCs are expected to ship with Cypress USB-C in 2018.
Notably, automotive revenues grew 16% in 2017. The increase was driven by content in ADAS, gateway, wireless and infotainment with advanced coexistence and additional requirements for cyber security and functional safety. The company believes that demand for NOR memory products in ADAS will increase its market share from 65% in 2017 to more than 70% in the next few years.
Operating Results
Gross margin was 45.4%, increasing 240 basis points (bps) sequentially. Operating income of $120.9 million increased 53.9% sequentially.
Cypress Semiconductor Corporation Price, Consensus and EPS Surprise
Cypress exited the quarter with cash, cash equivalents and short-term investments of approximately $151.6 million compared with $488.0 million in the last quarter. Trade receivables were nearly $296 million, decreasing from $356.5 million in the previous quarter. Net inventory was $272.1 million, decreasing from $287.0 million in the previous quarter.
As of Dec 31, 2017, Cypress’ cash flow from operations was approximately $202 million and capex was $8 million. The company also paid quarterly dividend of $38.7 million or 11 cents per share.
Guidance
Management expects first-quarter 2018 revenues in the range of $565-$595 million.
Consolidated GAAP gross margin is expected to be roughly in the range of 43-44%. Pro forma gross margin is expected in the range of roughly 44.5- 45.5%.
On a GAAP basis, the bottom line is expected to be in the range of a loss of 3 cents to earnings of a penny. Pro forma earnings per share are expected in the range of 22 cents to 26 cents.
Long-term earnings growth rate for Micron, Lam Research and The Trade Desk is projected to be 10%, 14.85% and 25%, respectively.
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Cypress Semiconductor (CY) Beats on Q4 Earnings and Revenues
Cypress Semiconductor Corp. reported fourth-quarter 2017 earnings per share of 28 cents, which beat the Zacks Consensus Estimate by 3 cents and improved 86.7% from the year-ago quarter.
The company reported non-GAAP revenues of $597.5 million, which beat the Zacks Consensus Estimate of $594 million. The figure was within the guided range of $575-$610 million and improved 12.7% on a year-over-year basis.
The robust top-line growth can be primarily attributed to improvement in automotive, IoT wireless connectivity and USB-C solutions.Driven by growth of these segments, the company has been performing well for quite some time.
The company returned 34.9% in the past year, while the industry grew 38.9% over the same time frame.
Revenues by Business Units
In 2016, the company reorganized its reporting structure into two divisions. These divisions are Microcontroller and Connectivity Division (MCD) and Memory Products Division (MPD).
Notably, MCD includes 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 MCD improved 21% year over year to $357.2 million backed by strong growth in wired connectivity driven by expanding USB-C customers. Seasonality in wireless connectivity led to a sequential decline of 4%. This segment accounted for 59.8% of fourth-quarter revenues. The company’s IoT wireless connectivity increased 46% from the year-ago quarter.
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, which accounted for the remaining 40.2% of fourth-quarter revenues, increased 4% sequentially and 4% year over year to $240.3 million, driven by increasing demand in the flash memory market.
In 2017, the company’s MCU products increased 11% year over year. The company noted that the adoption of 802.11ac and Bluetooth into emerging IoT platforms bode well for the company’s growth in the near term.
Cypress’ USB-C product continues to witness rapid penetration. The company’s wired connectivity revenue increased 70% in 2017 driven by high adoption of USB-C. Coming to the numbers, 120 unique models of PCs are expected to ship with Cypress USB-C in 2018.
Notably, automotive revenues grew 16% in 2017. The increase was driven by content in ADAS, gateway, wireless and infotainment with advanced coexistence and additional requirements for cyber security and functional safety. The company believes that demand for NOR memory products in ADAS will increase its market share from 65% in 2017 to more than 70% in the next few years.
Operating Results
Gross margin was 45.4%, increasing 240 basis points (bps) sequentially. Operating income of $120.9 million increased 53.9% sequentially.
Cypress Semiconductor Corporation Price, Consensus and EPS Surprise
Cypress Semiconductor Corporation Price, Consensus and EPS Surprise | Cypress Semiconductor Corporation Quote
Balance Sheet
Cypress exited the quarter with cash, cash equivalents and short-term investments of approximately $151.6 million compared with $488.0 million in the last quarter. Trade receivables were nearly $296 million, decreasing from $356.5 million in the previous quarter. Net inventory was $272.1 million, decreasing from $287.0 million in the previous quarter.
As of Dec 31, 2017, Cypress’ cash flow from operations was approximately $202 million and capex was $8 million. The company also paid quarterly dividend of $38.7 million or 11 cents per share.
Guidance
Management expects first-quarter 2018 revenues in the range of $565-$595 million.
Consolidated GAAP gross margin is expected to be roughly in the range of 43-44%. Pro forma gross margin is expected in the range of roughly 44.5- 45.5%.
On a GAAP basis, the bottom line is expected to be in the range of a loss of 3 cents to earnings of a penny. Pro forma earnings per share are expected in the range of 22 cents to 26 cents.
Zacks Rank and Stocks to Consider
Cypress carries a Zacks Rank #4 (Sell).
Better-ranked stocks in the broader technology sector include Micron Technology Inc. (MU - Free Report) , Lam Research Corporation (LRCX - Free Report) and The Trade Desk Inc. (TTD - Free Report) , all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term earnings growth rate for Micron, Lam Research and The Trade Desk is projected to be 10%, 14.85% and 25%, respectively.
Breaking News: Cryptocurrencies Now Bigger than Visa
The total market cap of all cryptos recently surpassed $700 billion – more than a 3,800% increase in the previous 12 months. They’re now bigger than Morgan Stanley, Goldman Sachs and even Visa! The new asset class may expand even more rapidly in 2018 as new investors continue pouring in and Wall Street becomes increasingly involved.
Zacks has just named 4 companies that enable investors to take advantage of the explosive growth of cryptocurrencies via the stock market.
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