Cirrus Logic (NASDAQ:CRUS) is a well-known Apple (NASDAQ:AAPL) supplier that, according to Zack's Equity Research, generates "more than 80%" of its revenue from the supply of chips to Apple. Cirrus supplies the audio codec found inside Apple's iPhone, iPad, and even Mac lineup, and it supplies some (but not all) of the class D audio amplifiers found in Apple's iDevices.

Cirrus is expected to report its fiscal second-quarter results on Oct. 29. Here's what investors should know ahead of that important report.

Cirrus' acquisition of Wolfson Microelectronics is now closed
On Aug. 21, Cirrus announced that its acquisition of competitor Wolfson Microelectronics had closed. Cirrus stated in its press release following the closure of the deal that it will "provide financial information for the combined company when [Cirrus] reports Q2 FY15 results."

Interestingly enough, analyst consensus estimates for Cirrus' current quarter call for $187.52 million in revenue and about $0.54 in earnings per share. Note that this appears to be slightly above the midpoint of the guidance range that Cirrus gave for the current quarter of $175 million to $195 million, but also keep in mind that this excludes any Wolfson-related revenue.

It will be interesting to see just how much Wolfson contributes to Cirrus' results, and how much the Wolfson revenue diversifies Cirrus from its heavy dependence on Apple.

What do the Apple numbers tell us?
While consensus for the current quarter sits at slightly above the midpoint of analyst estimates, the number that really seems to matter is what the company guides for its third fiscal quarter. Analyst consensus is calling for $216.80 million in revenue, which would represent a roughly 15.6% sequential increase, but a 1% decline year-over-year.

To understand these estimates, it's worth looking at last year's revenue numbers:


Cirrus FQ2 2014/Apple FQ4 2013 ($Millions)

Cirrus FQ3/Apple FQ1 2014 ($Millions)

% Change





Cirrus Logic




Sources: Apple, Cirrus Logic earnings releases.

Using the midpoint of Apple's revenue guidance of $63.5 million to $66.5 million for its fiscal first quarter of 2015, Apple is expecting sequential growth of 54.4%, which is slightly higher than what it saw last year. Further, given that Apple significantly beat estimates, registering $42.1 billion in sales against the midpoint of its guidance of $38.5 billion, Cirrus might actually have done better than expected for the current quarter.

Looking ahead
During Cirrus' last earnings call, management talked about how it is "now shipping general market products into multiple handsets on seven unique customer platforms." Management was also bullish on its shipments of boosted amplifiers, claiming that it "added a top-tier smartphone customer."

While Cirrus looks as though it should benefit from the success of Apple's iPhone 6 and 6 Plus rollout, it'll be important to hear more this quarter about the progress Cirrus is making in diversifying outside Apple, particularly with its non-Wolfson-related products. This could also prove to be an additional source of upside to current analyst estimates.

Foolish bottom line
Cirrus has been and probably will remain an Apple-focused story for quite a while yet. This isn't bad, especially given the success Apple continues to see. However, I think seeing a customer diversification story play out is critical to longer-term investors. If Cirrus can keep the Apple gravy train, while at the same time adding on new, lucrative revenue streams, then the stock could still deliver solid returns to long-term stockholders.

Ashraf Eassa has no position in any stocks mentioned. The Motley Fool recommends Apple and owns shares of Apple and Cirrus Logic. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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.