Shares of Cypress Semiconductor (Nasdaq: CY ) hit a 52-week low this week. Let's look at how it got here and whether dark clouds are ahead.
How it got here
The chip maker has fallen on hard times over the past year. After flying high up until the summer of 2011, the company has seen its top line shrink on nearly all fronts. Fellow touchscreen microcontroller maker Atmel (Nasdaq: ATML ) has also seen better days, recently hitting a new 52-week low for itself.
Cypress' fourth-quarter earnings release in January disappointed investors, in part due to gloomy guidance amid underwhelming Google Android tablet sales and inventory adjustments at gadget makers. The company's first-quarter results were encouraging, sending shares higher, but unfortunately that glow didn't last long.
The important programmable systems division saw revenue drop 14% last quarter to $81.9 million. This is the segment that includes Cypress' touchscreen controller offerings as well as its programmable system-on-a-chip, or PSoC, products.
How it stacks up
Let's see how Cypress stacks up with some of its peers.
CY data by YCharts
Let's add in some more fundamental metrics for deeper insight.
|
Company
|
P/E (TTM)
|
Sales growth (MRQ)
|
Net margin (TTM)
|
ROE (TTM)
|
| Cypress |
28.2 |
(20.6%) |
10.5% |
N/M |
| Atmel |
13.4 |
(22.5%) |
15.4% |
24.7% |
| Synaptics (Nasdaq: SYNA ) |
16.8 |
(7.5%) |
10.1% |
14.9% |
| Texas Instruments (Nasdaq: TXN ) |
19.7 |
(8.0%) |
13.6% |
16.7% |
Source: Reuters. TTM = trailing 12 months. MRQ = most recent quarter. NM = not meaningful.
It's apparent that the slowdown in business isn't specific to Cypress, as other players are seeing falling revenue.
Texas Instruments enjoys the touchscreen controller spot in Apple iDevices, while Cypress powers the touch interactions in iPod nanos and MacBooks. Atmel is a leader in the Android space, while Synaptics sits in seats such as Barnes & Noble's Nook, among others.
What's next?
Cypress may be down, but it's not out. Even though Android tablets have failed to live up to their lofty expectations, there's a chance that Microsoft (Nasdaq: MSFT ) Windows 8 ones will do better. Cypress is one of Mr. Softy's touchscreen controller partners, as is Atmel. Hopefully, Windows 8 will be just the positive catalyst that Cypress needs.
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