Audio-chip specialist Cirrus Logic
So Apple accounts for about half of Cirrus' sales today, and that percentage is only growing. When a parts supplier is this committed to a single customer, the supplier becomes a great barometer of demand for its dearest client.
Cirrus' shares opened 12% higher today thanks to a tremendous business update. Two weeks ahead of its full quarterly report, Rhode felt compelled to tell us that third-quarter sales will land at roughly $122 million -- far ahead of the $105 million analyst consensus.
Energy products will account for $17 million of those sales, down from $18 million in the previous quarter. All the rest is audio sales. That's a 25% boost to that division from one quarter to the next. Let's put that number into a seasonal perspective: In 2010, Cirrus' sales fell 5% between the second and third quarters. And that performance was good enough to nearly double Cirrus' share price between the two reports.
I'll read the tea leaves for you: Apple's sales will be terrifying in their holiday-fueled glory. Now the main question is, exactly how strong will Apple's revenue surprise be? And then, how much of the extra sales can CEO Tim Cook shepherd down to the bottom line? And I'm saying this as a long-term Apple skeptic, my friend. There's just no denying the explosive power of the coming report.
Add Apple and Cirrus to your watchlist and stay tuned for the answers -- Apple and Cirrus report only two days apart, like the soulmates they truly are. In the meantime, check out this short list of the three best smartphone plays from the chip industry -- including a detailed analysis of Cirrus. It's free today but might be gone tomorrow, so get your copy right away.