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Cirrus Logic Inc. Message Board

  • hageneriksson hageneriksson Oct 31, 2012 6:02 PM Flag

    it is not all about EPS like some of you might think

    if true you should perhaps invest your money in stocks like WDC or STX.

    CRUS is down in after hours despite a big beat and raise - so what is wrong ?

    Apple revenue concentration still climbing exponentially which leaves the company with zero pricing power and huge execution risk.

    Execution was flawed during the quarter as the new Apple product ramps experienced multiple problems eating into gross margin.

    Execution won't get better for the foreseeable future as margins will stay depressed or even go down further despite a huge uptick in revenues.

    Pricing pressure will become even greater.

    Other business will stay depressed going forward, LED product launches to be delayed.

    Bottom line:

    Cirrus currently finds itself to be stuck between a rock and a hard place - management is forced to secure future Apple revenues AT ANY PRICE otherwise 90% of the business will be gone - as the company is exposed to strong competition this might very well happen in the not so distant future.

    The risks associated with this stock are far greater than almost any other stock in the Semiconductor space, therefore valuation needs to be discounted heavily. Wouldn't assume a fair P/E here as the company is basically worthless without the Apple revenue stream. Would avoid the stock by any means and perhaps try a short sale in after hours.

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