3 Things You Missed in Cirrus Logic's Earnings Report

You know all the basics about Cirrus Logic's (Nasdaq: CRUS  ) fourth quarter:

  • Revenue jumped 46% year-over-year to $91.4 million.
  • Non-GAAP earnings stopped at $0.22 per diluted share, up from $0.16 per share a year ago.
  • The midpoint of Cirrus' first-quarter guidance points to revenue of about $91 million, a weaker gross margin than the fourth quarter's, and slightly higher operating expenses.

All of this, except the forward guidance, has been known since Cirrus pre-announced its results a couple of weeks ago. So what else is new and material in the full report and earnings call?

  • The disaster in Japan had no measurable effect on this quarter but is a major driver behind the meek first-quarter guidance. Cirrus ships audio chips and power management solutions to several car builders, which are reducing their build volumes for a while. Woes from the disaster don't just affect Japanese companies like Nissan, Toyota (NYSE: TM  ) , and Honda (NYSE: HMC  ) either; as CEO Jason Rhode puts it, "Everybody in that space has got suppliers all over the world, and all it takes is a windshield wiper blade you can't finish out."
  • Two or three years from now, Cirrus hopes to augment its audio-chip success with power controllers for the burgeoning LED lighting market. The first chips for this market just got back from the lab and will start producing modest revenues next year; by 2014 or so, there should be plenty of business up for grabs.
  • A shaky balance sheet often begets bad results down the road. With more than $200 million of debt-free cash equivalents on hand, that's hardly an issue for Cirrus. Rising inventories and accounts receivable can be another warning flag: Inventories rose less than 1% from the third quarter, and receivables jumped 5%. That's something to keep an eye on, as these line items grew while sales dipped in a typical after-holiday seasonal pattern.

So there you have it: one explanation for a soft outlook, one exciting business opportunity, and one potential trouble spot that you might have missed on first blush. More information is always better information, and we've made it easy to hook yourself up with a direct feed of Foolish news about any ticker you choose with our new free My Watchlist service that tracks your favorite companies. Make sure to add Cirrus Logic to My Watchlist right now by clicking here.

Fool contributor Anders Bylund holds no position in any of the companies discussed here. The Fool owns shares of Cirrus Logic. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. You can check out Anders' holdings and a concise bio if you like, and The Motley Fool is investors writing for investors.


Read/Post Comments (1) | Recommend This Article (7)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Add your comment.

DocumentId: 1485082, ~/Articles/ArticleHandler.aspx, 7/22/2014 9:42:27 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement