I Expected More from a Varsity Letterman
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It’s moments like these that make you a better investor. I “initiated coverage on Cypress Semiconductor (NASDAQ: CY), with a ‘buy’ rating” (“Did Your Name Make the List?”). Hilarious, I always get a kick out of the analyst-speak. This morning Cypress reported earnings that beat analyst estimates by 3 cents ($0.03). Or 4 cents, depending on which analyst expectations you want to take into account (earnings per share 32-cents versus 28-cents, 29-cents, give or take). They also beat analyst revenue expectations ($242M versus $236M consensus). A measly six million dollar revenue beat, meh.
So we are due for an uptick with this exceptional gift I have bestowed upon the eleven of you that care to listen, right? Not so fast. Cypress “warned” that first quarter expectations won’t be nearly as robust as everyone had hoped.
If you have ever had a loved one in a critical care unit, you are told to hope for the best and prepare for the worst (I know, I know, “Hope? I don’t trade on hope”). Well, Cypress is neither a “loved one”, nor are they in critical care. Separate yourself from the school of thought that adheres to the tenet of setting the bar low. I understand the uncertainty with current economic concerns. It’s actually the responsibility of Cypress to be forthright with their shareholders and express any concerns that could have a negative impact on future revenues. But I have to say, I am not a fan of setting a goal that is far too easily attainable. That’s worse than cheating at solitaire. So what are we supposed to do between now and April (next quarterly earnings call)?
It’s interesting to consider that the bar may have been set a little too low, for whatever reason -- the economy, Europe, rumors that Bernanke loses the beard, concerns that the Patriots won’t win the Super Bowl, whatever the case may be. Shortly after the call a juicy little nugget was made available and I am sure all of us are swelling with extremely ferocious levels of excitement.
In case you had something better to do and didn’t peruse this exciting piece of news, let me try and explain it without coming across like a high school physics teacher. Cypress has developed a scintillating new feature for their touchscreen controllers that, “dramatically improves performance without added cost”. This proprietary technology delivers three times higher signal-to-noise ratio (SNR), without compromising performance. This allows manufacturers to get to work on producing the thinnest handsets and tablets imaginable. I’m talking Kate Moss thin.
So while the first quarter bar has been set at beach party limbo-levels, let’s just keep our eyes on the prize and stay in this game. There will be opportunities to scoop up some discounted shares, possibly, but I’m not counting on that. If I can snap up anything around current levels next week ($19), I am going to do so. And if you don’t have the stomach to stay long, I don’t blame you. Just keep in mind that the iPad3 release is set for March, which happens to be my birthday. So there’s that.
Until next time, from the trading table,
Kyle Metivier
Motley Fool newsletter services recommend Cypress Semiconductor . The Motley Fool has no positions in the stocks mentioned above. Motley Fool blogger Kyle Metivier has no shares of Cypress Semiconductor as of yet, but is poised to initiate a long position if he could stop talking about it for 72 hours. 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 Motley Fool has a disclosure policy.
