Why Cirrus Logic Shares Surged

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of fabless semiconductor company Cirrus Logic (Nasdaq: CRUS  ) are off to the races, up as much as 24% after reporting solid first-quarter growth and blowing second-quarter estimates out of the water.

So what: Cirrus, which makes audio technology for Apple's (Nasdaq: AAPL  ) iPhone 4S, reported a profit of $0.22 (excluding one-time items) on a 7% rise in sales. Now here's where things get interesting. Cirrus expects that sequential revenue will grow 70% to 90% in the second quarter to a range of $170 million to $190 million. That's not even close to Wall Street's projections of $130 million in revenue. The boost could signal big wins for Cirrus Logic with Apple's upcoming iPhone 5 or the iPad Mini (or both).

Now what: As goes Apple, so goes Cirrus. The company currently relies on Apple for roughly 70% of its revenue, so the huge boost can only mean one thing: The iPhone 5 release is going to be huge. Either Cirrus has added to its impressive license wins with the iPhone 5 or it's been chosen for the iPad Mini. Regardless of whether it's one, the other, or both, this is another reason to be excited about Cirrus Logic. It's leading the field in audio innovation (amplifiers, noise suppression, and echo cancellation) and that's translating into big bottom-line results.

Craving more input? Start by adding Cirrus Logic to your free and personalized watchlist so you can keep track of the latest news with the company.

Also, to receive the latest up-to-date premium research on Apple with updates for one full year, click here to get your copy. It costs less than a week's worth of coffee and is packed with regular updates from the Fool's technology guru, Eric Bleeker.

Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.

The Motley Fool owns shares of Apple and Cirrus Logic. Motley Fool newsletter services have recommended buying shares of, and creating a bull call spread position in, Apple. 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. The Motley Fool has a disclosure policy.


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