Cirrus Logic. Who and what is it? Cirrus is like Apple. They have a long history of developing solutions They have been at the high end of technology the loin share of the time. They understand synergy and integration and how it plays into solutions. Apple and Cirrus are very different than INTEL. Intel was one who developed technology for taking business. Cirrus has been about solving problems providing solutions. This is a very different approach. In the end, solution makers win.
Cirrus became the interface between digital and the analog world company in 2000 under David French. They have done a great job in migrating passive parts away and a little in migrating toward the digital world.
They make parts for analog to digital with sound and electrical. There is great synergy across the business which in time will cut costs by half for R&D as compared to other companies. The idea of synergy is best brought out by their defining their lead in MS chips. It is about power usage, size, and quality. It is about all three not just one.
The future is most interesting. What is clear by reading their investor info, by watching their jobs postings for the past several years, and by looking at their culture internally that they now believe this:
these pieces put together, a compelling new technically (55 NM) coupling with a very big stream of cash flow, and a now in place workplace culture opens the door to very broaden future. The door to be a world class supplier to all is now open.
Whats new is coming: 55NM significantly changes the ASP game down and the margin game back up. What seems to be missing in the phones is a DSP for audio decode or that moved to the MS chip. This is worth a lot like adds back the ASP loss.
Of some interest to me is that it looks like Google is coming via MOTOROLA. M is like Apple they build solutions. This is likely a very good match. Now to markets.
As you consider existing markets, Cirrus for the next five years could very easily look like this:
With Cirrus likely gaining Google and if they expand into a NOKIA Cell phone high end middle end markets, and with a game changer technology, they are looking at 75% of mid to high market. The high and middle end are about 40% of the future mobile phone business. The full content is between 2--2.5 per device.
Apple is stilling on to about 70% of the real tablet market not readers included. At least the last data shows this. With readers its is much lower, but they estimate that 100 m tablets per quarter will be sold in a few years. Cirrus stands to keep this plus add a few more. Looking at a 100 million a quarter with 80% of the market adds a lot of revenue.
LED. This might be the most positively effected from 55 NM/ Cirrus LED chip is a MS chip like their sound and with a much smaller dye size, and a lot of new ability to add functions, this could really jump start the dimmer LED business. With a couple of billion a year LED to be sold Cirrus looks like 400 M units at 60-70 cents.
With killer technology, margins will be 50- a little across the business.
Grade, at this point, all you said was just your assumption and dream. What if they can't get in any new business? They are NOT in any of the new businesses you are talking about as of now. Those that they are in are miniscule in terms of revenue - take LED and brushless motor - those are peanuts. Dream on
Look past five years. Jason talked about a ten year plan. Nobody cared, but this is more than worth a look. Beaming. What good is it? It is basis for how you talk with your toaster, your microwave, your Oven, your video device, your car, your house, and anything else you could talk with. Image that 100 million car audio units per year at more than 10 bucks a car with Cirrus chips amps, beamers, DSPs etc or a 100 M video units per year with 20 bucks or more. Did you notice that they have stayed right with the auto market. Have you thought about why? It is not just about the little business. It is about their very long range plan. If you are not in the auto market, takes decades to get in. This is the size of the markets they are looking at. Look at a high power digital to analog conversion system Brushless motors. At some point this has to turn around. This is huge by itself 100's of millions of motors just waiting. This is about the next 10 years.
What Cirrus management is screaming loud is that they believe they are now ready to penetrate markets providing real solutions with the synergies of technology, value, execution, and innovation.
Interestingly, there were several job postings that showed up the day of the Barclays conference that illustrated how well they got the message about their markets and how ready they really are to make this next push. That cut in phone margin was not just about Apple it was about the market place.