Apple supplier Cirrus plunges after disappointing results

(Reuters) - Cirrus Logic Inc CRUS.O, whose audio chips are used in Apple's iPhones, reported quarterly revenue and profit below estimates due to weakness in smartphone sales, sending its shares down 11 percent in extended trading.

Cirrus’ third-quarter revenue fell nearly 8 percent to $482.7 million, well below the average analyst estimate of $529.4 million, according to Thomson Reuters I/B/E/S.

“Unanticipated weakness in smartphone demand that materialized in late December drove our Q3 results below expectations and further impacted our Q4 guidance,” Chief Executive Jason Rhode said.

The results come days after Apple Inc AAPL.O, its biggest contributor to revenue, gave a disappointing revenue outlook for the current quarter and sold fewer iPhones in the holiday quarter than expected.

The iPhone maker, through multiple contract manufacturers, accounted for about 86 percent of the supplier’s total sales in the latest quarter, a company filing showed.

No other end customer represented more than 10 percent of its net sales for the quarter, the company said, although Samsung Electronics 005930.KS had accounted for about 15 percent of its total sales in fiscal 2016.

Late last year, there were reports that Samsung had switched to lower priced components, suggesting a drop in demand from the Korean company.

Cirrus attributed the decline in revenue primarily to lower average selling price of components at a key Android phone manufacturer.

Rhode, however, said it was business as usual from a pricing perspective with its top customer. “Not a lot of drama on that front, I would say.”

Apart from smartphones, Cirrus Logic’s chips are used in tablets, wearable devices, digital headsets and smart home products.

The company forecast current-quarter revenue of $300 million to $340 million, well short of the analyst estimate of $372.1 million.

Sales in portable audio products unit, which accounts for the lion’s share of the company’s business, fell 9 percent to $438.7 million.

Excluding items, Cirrus earned $1.59 per share, missing analysts estimate of $1.69 per share.

In contrast, fellow Apple supplier Skyworks Solutions Inc SWKS.O beat profit expectations on strong demand for its wireless chips and technology that powers Internet of Things. Its shares rose 2 percent in extended trading.

Skyworks earned $2 per share, excluding items, beating the estimate of $1.92. Revenue rose 15 percent to $1.05 billion, in line with analysts’ expectation.

However, net income fell to $70.4 million, or 38 cents per share, for the first quarter ended Dec. 29, due to a $315.2 million income tax provision.

Reporting by Shariq Khan and Aishwarya Venugopal in Bengaluru; Editing by Anil D’Silva and Saumyadeb Chakrabarty