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Why Cirrus Logic Shares Got Totally Crushed

By Evan Niu, CFA - Apr 17, 2013 at 2:51PM

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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 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.

Interested in more info on Cirrus Logic? Add it to your watchlist by clicking here.

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Stocks Mentioned

Cirrus Logic, Inc. Stock Quote
Cirrus Logic, Inc.
$78.87 (-0.74%) $0.59
Apple Inc. Stock Quote
Apple Inc.
$143.11 (4.01%) $5.52

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