Cirrus Logic Investors Need to Watch These Red Flags

Cirrus Logic Investors Need to Watch These Red Flags

Cirrus Logic (NASDAQ: CRUS) has paid the price of relying on Apple (NASDAQ: AAPL) for the majority of its revenue. The audio-chip specialist isn't going to win big from Cupertino's latest generation iPhones as Apple hasn't added new content from Cirrus in its latest devices, and its next biggest customer, Samsung, is switching to lower-priced components.

As a result, the company's top-line growth is expected to remain stunted this year even though it got 82% of its sales from Apple in the second quarter, up from 76% in the first one. In fact, Cirrus expects its revenue to remain flat year over year in the current quarter, which might seem surprising as Apple is busy ramping up iPhone production.

More specifically, the midpoint of Cirrus' revenue guidance is just 1% higher than last year's December-ended quarter, while Apple's outlook for the identical period indicates strong iPhone sales growth. Meanwhile, Cirrus' strategy of diversifying its revenue isn't bearing fruit, and this could be a big problem for the company.

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Source: Fool.com