Please ensure Javascript is enabled for purposes of website accessibility

Why Cirrus Logic Stock Tumbled Today

By Timothy Green - Nov 12, 2018 at 11:48AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Rough iPhone news sent shares of the Apple supplier lower.

What happened

Shares of Cirrus Logic (CRUS 2.95%) were down about 11% at 11 a.m. EST. While there was no company-specific news affecting the audio chip developer, lowered guidance from a fellow Apple supplier and negative analyst notes regarding iPhone shipments weighed down the stock.

So what

Lumentum, a manufacturer of optical and photonic products, slashed its second-quarter guidance on Monday to reflect a request from one of its largest customers to reduce laser diode shipments. Apple is Lumentum's largest customer, accounting for 30% of annual sales, although the company didn't disclose the name of the company making the request. Lumentum now expects second-quarter revenue between $335 million and $355 million, down from a previous range of $405 million to $430 million.

A declining stock chart.

Image source: Getty Images.

On top of Lumentum's guidance cut, two analysts had some pessimistic things to say on Monday. Longbow Research sees iPhone order cuts of 20% to 30% based on its checks, mostly affecting the XR and XS Max models, while JPMorgan expects iPhone order cuts and margin headwinds. 

iPhone weakness is very bad news for Cirrus. Apple accounted for 81% of the company's sales in fiscal 2018.

Now what

Cirrus has been working to diversify for years, getting its chips into Android devices as well as nonphone products like headsets. But the company remains heavily dependent on the success of the iPhone. Cirrus suffered a 13.9% sales slump in its second quarter, and it expects another steep decline in the third quarter. The company is hoping to return to growth in fiscal 2020, but lingering iPhone weakness could make that difficult.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Cirrus Logic, Inc. Stock Quote
Cirrus Logic, Inc.
CRUS
$72.64 (2.95%) $2.08

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
336%
 
S&P 500 Returns
115%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/26/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.