Friday, April 15, 2011

Cirrus Logic (CRUS) Plunges on Downwardly Revised Gross Margin Outlook

The downwardly revised gross margin outlook of Cirrus Logic (Nasdaq:CRUS) for the March quarter put shares of the company under pressure, as it dropped as much as 14 percent in trading, although it has recovered a little as the trading day goes on.

Prior estimates for gross margins had been 54 to 56 percent, and the revised estimates were dropped 4 to 6 percent to 50 percent.

The reason for the change is from a production problem with "a new audio device that entered high volume production in March 2011."

While revenue and operating expenses are expected to be close to previous guidance, EPS will miss the consensus estimate by about 5 cents for March, as well as drag them down for the June and September quarters.

Cirrus was trading at $16.09, falling $2.01, or 11.10 percent, as of 2:07 PM EDT.

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