Cypress Semiconductor Corporation (NASDAQ:CY) may be enduring difficult market conditions, but it's not about to let shareholders go by the wayside. In its second quarterly report since merging with Spansion this past March, the company not only demonstrated impressive progress in its quest for realizing annualized synergies, but also revealed a massive renewed effort to continue to return capital to patient investors. Shares closed up 3.4% Thursday as a result.

Let's take a closer look at Cypress' headline figures:

Cypress Semiconductor results: The raw numbers


Q3 2015 Actuals

Q3 2014 Actuals

Growth (YOY)

Adjusted Revenue*

 $470.1 million

 $463.8 million


Adjusted Net Income

 $60.0 million

 $30.3 million


Adjusted EPS




*Includes $6.25 million in revenue from intellectual property licensed to Samsung, but excluded from GAAP revenue due to purchase accounting for the Spansion merger. YOY: year over year. Data source: Cypress Semiconductor. 

What happened with Cypress this quarter?

  • Revenue fell 4.3% sequentially from last quarter due to the "softening" semiconductor market.
  • Gross margin of 41.2%, in line with expectations
  • Operating expenses declined 7.9%, helped by continued integration progress.
  • Realized $120.3 million in annualized synergies so far -- up from $51.6 million last quarter and ahead of Cypress' three-year plan to achieve annualized synergies of $160 million.
  • Revenue by business segment:
    • Programmable systems down 12% year over year to $178.5 million
    • Memory products flat at $260.9 million
    • Emerging technologies up 69% to $13 million
    • Data communications down 8% to $17.6 million
  • By geography:
    • Japan represented 33% of sales, compared to 34% last quarter
    • Europe comprised 14% of sales, the same as last quarter
    • Americas also comprised 14% of sales, up from 11% last quarter
    • China/rest-of-world division represented 39% of sales, down sequentially from 41% last quarter
  • Approved a new $450 million share repurchase authorization. This replaces Cypress' previous $400 million authorization approved in September 2015, under which it repurchase $327 million of Cypress stock.
  • Completed the sale of TrueTouch mobile touchscreen business to Parade Technologies. Note Cypress will continue to sell TrueTouch products to key fast-growing focus markets including automotive, industrial, and home appliance.
  • Previously confirmed it submitted an offer to acquire larger sector peer Atmel (UNKNOWN:ATML.DL), but that the offer expired and its interest has been withdrawn. "Cypress regularly evaluates acquisition opportunities to complement its existing business," the company stated at the time, "and maintains a disciplined approach to ensure that it continues to deliver long-term value to its shareholders.

What management had to say
"Despite the current semiconductor industry environment," said Cypress Semiconductor CEO T.J. Rogers, "we made progress selling into fast-growing segments of the Automotive, Industrial, Home Appliance and Internet of Things (IoT) markets plus applications using the USB Type-C standard, which provides power and data from a single plug. Our new $450 million stock buyback program, announced today, underscores our confidence in our business model and our continued commitment to return capital to our shareholders through the combination of stock buybacks and our quarterly dividend."

Looking forward 
For the current quarter, Cypress expects sales of $430 million to $460 million, gross margin of 41%, and diluted earnings per share of $0.11 to $0.15. By comparison, analysts' consensus estimates were more optimistic on both fronts, predicting higher revenue of $480.7 million and earnings of $0.16 per share.

Nonetheless, keep in mind shares of Cypress Semiconductor are still down more than 30% so far in 2015 as of this writing. So in the wake of Cypress' ambitious repurchase authorization, continued progress in key focus markets, and its majority of targeted post-merger synergies achieved far ahead of schedule, it's unsurprising the market was willing to bid Cypress stock up this week.