Cirrus Shares Got Crushed: What You Need to Know
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of audio-chip maker Cirrus Logic (NAS: CRUS) plummeted 18% on Thursday after its quarterly results and guidance heavily disappointed Wall Street.
So what: While the Apple (NAS: AAPL) iPhone and iPad parts supplier managed to meet profit estimates for the second quarter, its paltry top-line growth, coupled with rapidly rising costs, is forcing investors to drastically lower their expectations. In fact, its operating margin for the quarter declined a whopping 11 percentage points, triggering fresh fears over the company's long-term profitability.
Now what: Expect the shares to remain sluggish in the short term. Citing continued weakness in the economy, management forecasts third-quarter revenue of just $102 million to $108 million, while analysts were expecting $108 million. Of course, with the stock now trading at a P/E of 5 and CEO Jason Rhode reassuring investors that its remains "well positioned to capitalize on some extraordinary growth opportunities," Cirrus might be a long-term opportunity worth checking out.
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At the time this article was published Fool contributor Brian Pacampara owns no position in any of the companies mentioned. The Fool owns shares of Cirrus and Apple. Motley Fool newsletter services have recommended buying shares of and creating a bull call spread position in Apple. Try any of our Foolish newsletter services free for 30 days.We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.