Thursday, March 31, 2011

Cirrus Logic (CRUS) Too Reliant on Apple (AAPL)?

As Apple (NASDAQ:AAPL) goes so goes Cirrus Logic (NASDAQ:CRUS), and that generates the question of the sustainability of the company if it doesn't expand its market.

The problem isn't so much whether or not Apple will continue to enjoy success in the smartphone market for some time, the question is whether or not Cirrus will continue to remain the primary vendor they work with there, as evidenced by Apple's recent decision to use Qualcomm (NASDAQ:QCOM) instead of Infineon for its baseboard chip.

Cirrus' design does help protect is some, as it comes with strong customization, but those specs could be imitated or adapted easy enough if Apple chose another company.

With about 54 percent of the revenue generated by Cirrus coming from Apple, they do need to do some work to lower its exposure and boost investor confidence.

That's not to say there aren't some other wins for Cirrus, as they have won business with Ford Motor (NYSE:F) and Sirius (NASDAQ:SIRI) for unrelated products, but together with other offerings, is still less than half of the business they do with Apple alone.

Cirrus closed Wednesday at $21.11, falling $0.23, or 1.08 percent.

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