What happened

Shares of Cirrus Logic, Inc. (NASDAQ:CRUS) tumbled 10.6% in February, according to data provided by S&P Global Market Intelligence, after the company's third-quarter fiscal 2018 sales failed to meet Cirrus' own guidance.

So what

The company's revenue for the quarter was $482.7 million, which was a 7.7% year-over-year drop, and fell far short of the company's sales guidance of between $510 million and $550 million for the quarter.

Grey and red chalk arrows on a blackboard, pointing down

Image source: Getty Images.

Investors were clearly upset with the revenue miss, and pushed the company's share price down throughout the month. Cirrus' management blamed the revenue problems on weak smartphone demand: "While our design position with key customers remains strong, revenue was below expectations due to unanticipated weakness in smartphone demand that materialized in late December."

In addition to its sales problems, GAAP (generally accepted accounting principles) net income also fell by 72% from the year-ago quarter, to $33.8 million.

Now what

Cirrus shares have gained more than 2% so far this month, but the company may not be completely out of the woods yet.

Cirrus said in its latest quarterly filing that it earns about 80% of its revenue from Apple, which means the smartphone weakness is very likely due to sales of the iPhone X underperforming expectations. In late January Apple cut production of its new device by half after a lackluster holiday season, according to the Nikkei Asian Review.

If iPhone X production is indeed cut back, then Cirrus will likely feel the effects at least through the current quarter.

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