Cypress Semiconductor Corporation (CY – Expert Report) reported second-quarter 2014 earnings of 8 cents per share, surpassing the Zacks Consensus Price quote by 5 cents per share on the back of greater gross margins and strong expense control.
Cypress reported earnings of $183.6 million, up 7.8 % sequentially but down 5.1 % year over year. In addition, profits were within managements support variety of $181.0$186.0 million and almost in line with the Zacks Agreement Estimate of $184.0 million. The sequential improvement was backed by improvement in all departments, particularly continued higher need for TrueTouch products and strength in automotive and commercial markets.
In the quarter, the book-to-bill ratio was 0.99 versus 1.08 in the prior quarter. The sequential decrease was due to gentleness in the customer electronic devices sector.
Profits by Segment
The Programmable Systems Division (PSD), which generated 40.7 % of second-quarter profits, includes two sections. The first is the old Customer and Calculation Department (CCD) consisting of TrueTouch, CapSense and Ovation businesses, while the 2nd includesthe core PSoC company. The segment increased 8.0 % sequentially due to strong development in TrueTouch and CapSense businesses. Nevertheless, revenues were down 8 % year over year to $74.7 million.
The Memory Products Department (MPD) generated 46.6 % of incomes, up 5.0 % sequentially but down 3.0 % year over year to $85.6 million. The sequential boost was mostly due to strength in the Mb RAM department which concentrates on automobile and commercial markets. This division remains to focus on 4 SRAM company systems, general-purpose programmable clocks and procedure innovation licensing.
The Data Communication Division (DCD) produced 9.8 % of the incomes, up 15.0 % sequentially to $18.0 million due to USB strength owing to an improving PC market. This division has actually been realigned to focus solely on USB controllers, Wireless USB and West Bridge peripheral controllers for handsets, Computers and tablets.
The Emerging Technology Division (ETD) created the staying 2.9 % of profits amounting to $5.4 million, up 33.0 % sequentially. The strength in the quarter was due to increase in brand-new clients and design wins. This start-up section includes Cypress AgigA Tech Inc., Deca Technologies Inc. and all majority-owned subsidiaries of Cypress. The ETD division also includes the foundry business and other development-stage activities.
Reported gross margin for the quarter was 52.0 %, up 640 bps sequentially and 480 bps from the year-ago quarter figure of 47.2 %. The boost was primarily due to beneficial product and consumer mix.
Operating expendituresBusiness expenses of $84.8 million decreased 14.9 % year over year from $99.6 million in the year-ago quarter. Both study and development and selling, general and management expenses lowered as a percentage of sales. As a result, reported operating margin of 5.8 % compared positively with the year-ago quarters margin of (4.2 %).
The quarters GAAP net income was $9.5 million or 6 cents per share vs. $3.8 million or 2 cents in the equivalent quarter last year. Excluding special items but including stock-based compensation expenditure, non-GAAP revenues were 8 cents compared to 6 cents in the year-ago quarter.
Cypress left the 2nd quarter with cash, cash equivalents and short-term investments of approximately $113.8 million versus $111.5 million in the prior quarter. Trade receivables were $115.8 million, down from $118.2 million in the prior quarter.
During the quarter, Cypress cashcapital from operations was approximately $45.3 million, spending $5.8 million on capex. The business also paid quarterly dividend worth $17.4 million.
Management anticipates third-quarter 2014 incomes in the variety of $185.0$191.0 million, standing for an increase of 14 % sequentially at the mid-point. The Zacks Agreement Price quote for third-quarter earnings is pegged at $186.0 million. Management expects emerging tech and MPD segments to grow sequentially in the third quarter.
Gross margin is expected to be down slightly to 53 %, generally due to product and client mix. Operating costsOperating costs are anticipated to be $71.0 million and tax expense of about $1.7 million. Non-GAAP revenues per share are likely to be in the variety of 1517 cents, well above the Zacks Consensus Estimate of 8 cents.
Cypress is a semiconductor company, offering high-performance, blended signal and programmable solutions. The business reported suitable profits with bottom-line figures exceeding the Zacks Consensus Price quote.
In the quarter, the company introduced several products which are expected to drive profits development in the near future. Also, management offered a strong forward assistance, suggesting durable need trends.
Though we remain positive about the companys advanced technology, development in the automobile and commercial markets and momentum in brand-new products, weak macro environment and inadequate visibility related to require patterns continue to be causes of issue.
Cypress has a Zacks Rank # 3 (Hold). Other stocks that are carrying out well at current levels consist of Broadcom Corp. (BRCM – Expert Report), FormFactor Inc. (KIND – Expert Report) andOmniVision Technologies, Inc. (OVTI – Analyst Report). All these stocks sport a Zacks Rank # 1 (Strong Buy).