Cypress Beat Q1 Earnings Estimates, Turns Bullish

Cypress Semiconductor Corporation (CY)Cypress SemiConductor Corporation, the well-known Silicon chip manufacturer stated fiscal 2016 first-quarter earnings of $0.07 per share. This did exceed the estimates of the analysts by a whisker.

The company merged with Spansion, Inc. in the previous year, and the y-o- y revenue has only doubled since then. As mentioned underneath, the growth prospects seem to make way for a LONG position in the counter. On Tuesday, Cypress had its share price closing at $9.23.

The adjusted revenue in the first quarter of fiscal 2016 was $209.1 while it rose up to $425.2 million in the first quarter of fiscal 2016. The amount estimated by the analysts for the first quarter was $436 million. Eventually, the company was able to achieve the revenue guidance for the first quarter between $410 million to $440 million.


A 4% segment wise sequential increase in the programmable systems division was noticed, which boosted the revenue up to $164 million in the first quarter of fiscal 2016. A sequential decline of 17% to $215.1 million was noticed in the first quarter revenue of memory products. At the same time, 20% growth was noticed in the emerging technologies divisions, increasing up to $26 million. An increase of 15% in revenue was seen in the data communications division, bringing it up to $20.1 million.

Earnings of only $23 million or $0.07 per share were noticed in the first-quarter comparable to a net loss of $0.45 per share or $87.9 million. According to the analysts’ Wall Street estimates, it should have been $0.06 per share in the first quarter. The earnings made by Cypress seemed to be in line with the per-share outlook, which fell under the range of $0.04 and $0.08. The revenue guidance for the second quarter was also reported by the company. Cypress estimates the second quarter revenue to be between $440 million and $470 million, while the analysts expect $455 million.

When it comes to the non-GAAP EPS outlook of the company, it seems to be much higher than what the analysts estimated. The second quarter non-GAAP earnings per share as expected by Cypress falls under the range of $0.10 to $0.14. At the same time, Wall Street estimates remain to be $0.03 per share for the second quarter.

A quarterly cash dividend was also announced by the company, which was $0.11 per share payable on the 21st of July, 2016.

Cypress came up with a low energy Bluetooth module during the first quarter which extended the range to 400 meters (eight times more than what the other modules cover). They also came up with two families of 40nm ARM-based microcontrollers, one for high volume consumer applications and the other for automotive products.

Cypress claims that it has plans to acquire “Internet of Things“, a business division of Broadcom for $550 million (all-cash deal). This deal is hoped to increase the revenue by $189 (trailing 12 months). As the Bluetooth and industrial Wi-Fi connectivity continue to grow at 17% per year, this deal, which is estimated to conclude in the third quarter of 2016 with a start increasing revenue in 2017. Hence, we are going to assume an increase in the share price in the coming weeks.

The stock seems to be trading over the 50-day moving average of 8.74, and major support is pointed out by the chart at 8.75. It is only after ten that the first resistance to the continuous increase is seen. RSI indicator seems just to go upwards and cross the halfway line.

Cypress Semiconductor Corporation Stock Price 18 May 2016

Cypress Semiconductor Corporation Stock Price 18 May 2016

Hence, it would be sensible for a binary options trader to look for (One-Touch) LONG CALL Option contracts, setting the expiry date between the 15th and 20th of June. To ensure success, we recommend a strike price of $10 or lower in this binary options trade.

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