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What: Shares of Cirrus Logic (CRUS -0.74%) have gotten totally crushed today, down by as much as 17%, after the company released preliminary results last night.
So what: Revenue last quarter is expected to be approximately $206.9 million, shy of the Street forecast of $210.2 million. The company also said it would record a net inventory reserve of $23.3 million, including $20.7 million related to a decreased forecast of high volume products as Apple transitions toward newer components.
Now what: Gross margin will fall dramatically in the quarter due to the inventory reserve, and is expected to come in around 40.4%. Profitability should recover next quarter back to 50% to 52%. Needham has downgraded the stock from "strong buy" to "buy," while reducing its price target from $45 to $30. The analyst notes near-term weakness from Apple, but remains positive overall of Cirrus Logic's prospects as investors head into the latter half of the year.
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