Hit hard by a downturn in the smartphone market, Austin-based chipmaker Cirrus Logic on Monday said it had a significant drop in both revenue and profit in its fiscal third quarter.
Cirrus Logic’s third quarter revenue fell from $523 million in 2016 to $482.7 million last year, a drop of 7.7 percent. More significantly, revenue was far below Wall Street projections, which were for $531.8 million, according to analysts surveyed by Zacks Investment Research.
The company said it had third-quarter profit of $33.8 million, or 52 cents per share. Adjusted for pretax expenses and stock option expense, earnings were $1.59 per share. That was well below analysts’ projections of of $1.77 per share, according to Zacks.
Cirrus Logic also warned that its financial results would impact its current quarter, saying that it now projects revenue of between $300 million to $340 million. Its revenue was $327.9 million during its fourth quarter in the previous fiscal year.
The company’s stock tumbled following the earnings report, falling more than 10 percent in after-hours trading.
Cirrus Logic makes low-power voice and audio chips for smartphones, tablets and headphones. The company has mainly developed chips for Apple Inc. Last week Apple gave a disappointing revenue outlook for the current quarter and reported that it sold fewer iPhones in the holiday quarter than expected.
“Unanticipated weakness in smartphone demand that materialized in late December drove our Q3 results below expectations and further impacted our Q4 guidance,” Jason Rhode, Cirrus Logic president and CEO, said in a written statement.
Rhode and chief financial officer Thurman Case said that while results were lower than the company expected, they remain optimistic.
“Although sales in Q3 and our Q4 outlook are disappointing, the company remains focused on delivering a robust portfolio of compelling components in a timely manner and maintaining our strong relationships with key customers, which we believe will fuel future growth opportunities,” Rhode and Thurman wrote in a letter to shareholders Monday.
They also also wrote that the company’s relationship with its largest customer “remains outstanding with design activity continuing on various products.” Though the company never publicly states it, Apple is Cirrus Logic's biggest customer. Its other customers include Motorola, Samsung and Sony.
Rhode and Thurman said the company has invested in automatic speech recognition technology and general voice post processing.
“As connected devices become more entwined in our lives, the requirements for secure verification and user privacy are contributing to a surge in demand for biometric voice authentication,” Rhode and Thurman wrote to shareholders.
“We believe Cirrus Logic’s future is bright,” Rhode and Thurman also wrote. “As our core competency of designing complex analog and digital signal processing components at ultra-low power levels, combined with our extensive software capabilities, is increasingly important in the sophisticated audio and voice markets we serve.”
The chipmaker also announced Monday that it would be purchasing back up to an additional $200 million of its shares. Companies usually buy back their own shares from the marketplace when they believe the shares are being undervalued. Buying them back can reduce the number of outstanding shares. Cirrus Logic said its share repurchase program would be funded by its general revenue.
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