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Cypress Reports First-Quarter 2010 Results | Cypress Semiconductor

Cypress Reports First-Quarter 2010 Results

Last Updated: April 22, 2010


  • Q1 results exceeded guidance and outperformed typical first-quarter results
  • Non-GAAP gross margin of 55.6% at highest level since 2000
  • Highest non-GAAP profit since 2004 with 18.6% PBT
  • Handset revenues increased 90% year-on-year; significant growth expected in 2010
  • Book-to-bill ratio and backlog are at multiple-year highs
  • Q2 revenue and earnings expected to be higher than current Street consensus

SAN JOSE, Calif., April 22, 2010 — Cypress Semiconductor Corp. (Nasdaq: CY) today announced that revenue for the 2010 first quarter was $202.3 million, up 4.3% from $194.0 million for the prior quarter, and up 45.2% from $139.3 million for the year-ago period.

Cypress recorded GAAP net income of $12.7 million in the 2010 first quarter, or diluted earnings per share of $0.07. This compares with last quarter’s diluted earnings per share of $0.02 and a diluted net loss per share in the year-ago first quarter of $0.66.
Non-GAAP1 net income for the 2010 first quarter—excluding stock-based compensation, acquisition-related charges, restructuring and other special charges and credits—totaled $34.1 million, or diluted earnings per share of $0.17. That compares with non-GAAP1 diluted earnings per share of $0.16 for the prior quarter and a diluted net loss per share of $0.22 for the year-ago first quarter.
Cypress President and CEO T.J. Rodgers said, “We are pleased to report a sequential revenue increase of 4.3% in a quarter that normally sees a seasonal decrease of 4% to 8%. Our MID division realized strong, sequential growth as our high-performance SRAMs benefited from strength in communications and industrial markets and additional share gains with strategic global customers. We also enjoyed a 90% year-over-year increase in handset revenues led by our TrueTouch™ touchscreen controllers and West Bridge® peripheral controllers, and our PSoC®-powered OvationONS™ optical navigation sensors, which will ramp to volume production in Q2. These products offer software-based configurability and quick time to market—unique benefits that are highly desired by our OEM customers.
“The significant increase in our handset revenue represents a major accomplishment for Cypress. Just two years ago we had limited revenue in this market. Today we are engaged with every major handset OEM. We expect to see our handset revenue continue to increase sharply over the next few years.
“Customers are continuing to provide increased booking visibility into Q2 and Q3, and we will have many new products and design wins ramping throughout the year,” Rodgers continued. “Our backlog has reached a multi-year high, and our book-to-bill ended Q1 at 1.34—a substantial, sequential increase that is significantly above our typical expectations. We expect sales and profits to continue to increase throughout 2010 as the economy recovers and we introduce additional proprietary and programmable products into the market.”
Non-GAAP1 consolidated gross margin for the first quarter was 55.6%, up 1.7 percentage points from the previous quarter. The increase was due mainly to increased manufacturing efficiencies and a favorable product mix. Excluding Emerging Technologies3, our Core Semiconductor4 non-GAAP gross margin was 56.4%, up 1.2 percentage points sequentially.
On a GAAP basis, first-quarter consolidated gross margin was 52.6%, up 3.7 percentage points from the previous quarter. Our Core Semiconductor4 gross margin on a GAAP basis was 53.4%.
First-quarter net inventory decreased 8% quarter-on-quarter and 10% year-on-year. Net inventory has declined 33.1% from the pre-recessionary peak in the third quarter of 2008.
Cash and investments totaled $329.5 million, or $2.04 per outstanding share.
Additional first-quarter data and comparisons relevant to Cypress’s business units are presented below:


April 4, 2010





Core Semi4

Emerging Tech.3









Percentage of total revenues















On a GAAP basis







On a non-GAAP1 basis







January 3, 2010





Core Semi4

Emerging Tech.3









Percentage of total revenues















On a GAAP basis







On a non-GAAP1 basis







  1. Refer to “Reconciliation of GAAP Financial Measures to Non-GAAP Financial Measures” and “Notes to Non-GAAP Financial Measures” following this press release for a detailed discussion of management’s use of non-GAAP financial measures, as well as reconciliations of all non-GAAP financial measures presented in this press release to the most directly comparable GAAP financial measures.
  2. CCD – Consumer and Computation Division; DCD—Data Communications Division; MID—Memory and Imaging Division.

  3. “Emerging Technologies” – Business outside our core semiconductor businesses outlined in footnote 4. Includes wholly owned subsidiaries Cypress Envirosystems, AgigA Tech, the ONS (Optical Navigation Systems) Business Unit, the China Business Unit and our foundry-support business.

  4. “Core Semiconductor” – Includes CCD, DCD and MID divisions and excludes “Emerging Technologies.”


Programmable and proprietary products accounted for 81% of Cypress’s revenue in the first quarter.
Cypress announced that its TrueTouch touchscreen controller is driving multi-touch gesture inputs and the camera focus feature on NEC’s new DoCoMo® PRIME series™ N-02B mobile phone. Fujitsu also selected TrueTouch to implement the water-resistant touchscreen on the new DoCoMo PRIME series F-01B mobile phone. Powered by PSoC, TrueTouch is a fully integrated touchscreen solution that allows dozens of standard and custom gestures to be programmed in software.
Cypress announced that its TrueTouch solution will be supported by the soon-to-be-released Windows® Phone 7 Series mobile handset platform. This market expander for Cypress allows handset manufacturers using the new Windows platform to implement capacitive touchscreen interfaces without the need to develop external drivers or custom software.
Cypress introduced high-precision stylus support for touchscreen mobile handsets using TrueTouch. The new solution reads input from a stylus with a 1-mm tip—three- to four-times finer than competing products—enabling the entry and recognition of complex Asian characters and the ability to point to the ever-smaller icons on today’s mobile phones.
Cypress also announced hover detection for TrueTouch. This new feature enables smart handsets to anticipate the touch of a finger and enlarge on-screen content such as detailed maps and tiny web links, making them easier to find and select.
Cypress has teamed up with ARM Limited’s Keil tools division to integrate free Keil compilers into Cypress’s PSoC Creator™ design software, and to provide compiler support for PSoC 3 and PSoC 5 in Keil’s uVision® 4 design environment. PSoC Creator is the advanced, schematic-based software development platform for Cypress’s new PSoC 3 and PSoC 5 architectures.
Cypress’s PSoC 3 and PSoC 5 programmable system-on-chip architectures, along with its PSoC Creator™ design tool have been named finalists in EDN magazine’s annual “Innovation Awards” competition. The products were nominated by the magazine’s editors. Winners will be based on reader voting.
Cypress introduced a PSoC-based, programmable Powerline Communication (PLC) solution that enables the reliable transmission of command and control data over high- and low-voltage power lines. The hardware platform combines a modem, network protocol and application code with PSoC’s programmable analog and digital circuitry, providing an integrated solution that speeds time to market. Key applications include smart metering, LED lighting, energy management and solar markets.
Cypress introduced the CY8CLEDACxx family of AC-DC dimmable and non-dimmable digital power drivers for LED retrofit bulbs up to 25 watts.
Cypress’s PowerPSoC® embedded power controller has been designed into solid-state lighting leader MSi’s iPAR-38 LED replacement bulb. PowerPSoC enables the bulb to deliver several unique features, including adjustable power levels, communications capability, and the ability to be dimmed.
Cypress’s PSoC 3 FirstTouch™ Starter Kit has been selected for use in the 2010 robotics competition sponsored by FIRST (For Inspiration and Recognition of Science and Technology), a nonprofit organization which promotes science and technology. Students will build robots using PSoC to drive touch-interface, LCD-display, motor-control, battery-management and audio-processing functions.
Cypress announced it will build a PSoC lab at India’s National Institute of Technology and at the DOEA Center, both located in Calicut. The company will provide hardware, software and training to both institutions.
TPACK, which makes core data transport and network-switching ICs, has partnered with Cypress to develop a reference design for Ethernet switches and traffic managers that combines TPACK’s 40-Gbps Carrier Packet Engine with Cypress’s high-speed, 72-Mbit Quad Data Rate™ II (QDR™ II) SRAMs. The solution targets telecom and networking equipment suppliers.
Cypress Envirosystems’ Wireless Gauge Reader has won a 2010 Golden Gas Award from the trade publication Gases & Instrumentation International, for technical innovation, and its ability to solve an important challenge in the gas industry. The Cypress Envirosystems’ product reduces waste and disposal of gas, improves production uptime, and saves labor.
Cypress delivers high-performance, mixed-signal, programmable solutions that provide customers with rapid time-to-market and exceptional system value. Cypress offerings include the flagship PSoC® programmable system-on-chip families and derivatives such as PowerPSoC® solutions for high-voltage and LED lighting applications, CapSense® touch sensing and TrueTouch™ solutions for touchscreens. Cypress is the world leader in USB controllers, including the high-performance West Bridge® solution that enhances connectivity and performance in multimedia handsets. Cypress is also a leader in high-performance memories and programmable timing devices. Cypress serves numerous markets including consumer, mobile handsets, computation, data communications, automotive, industrial and military. Cypress trades on the Nasdaq Global Select Market under the ticker symbol CY. Visit Cypress online at
Statements herein that are not historical facts and that refer to Cypress or its subsidiaries’ plans and expectations for the remainder of fiscal year 2010 and the future are forward-looking statements made pursuant to the Private Securities Litigation Reform Act of 1995. We may use words such as “believe,” “expect,” “future,” “plan,” “intend” and similar expressions to identify such forward-looking statements that include, but are not limited to, statements related to the semiconductor market, the future economic environment, our expected growth in our handset revenue, the strength and growth of our proprietary and programmable products, led TrueTouch, West Bridge and our PSoC-powered OvationONS optical navigation sensors, our plans to ramp to volume production on such products in Q210,  our expected product introductions and the revenue that may result from them, our expectations regarding our Q210 revenue and earnings, our expectations regarding our SRAM market share, positive signs gleaned from the ordering patterns of our customers, the demand and growth in the markets we serve, the booking patterns and  visibility provided by our customers, our plans to build a PSoC lab in India, our expectations regarding product and design wins, our expectations for sales and profit throughout 2010, and our expected revenue from our Emerging Technology Division. Such statements reflect our current expectations, which are based on information and data available to our management as of the date of this release. Our actual results may differ materially due a variety of uncertainties and risk factors, including but not limited to the state of and future of the global economy, business conditions and growth trends in the semiconductor market, our ability to timely develop and roll out new products, our ability to enter into new markets with our portfolio of products, whether our products perform as expected, whether the demand for our proprietary and programmable products, including especially our TrueTouch, West Bridge, PSoC, and OvationONS products, is fully realized, whether our product and design wins result in increased sales, customer acceptance of Cypress and its subsidiaries’ products, seasonality in the markets we serve, our ability to achieve lower operating expenses and maintain a solid balance sheet, the actions of our competitors, the behavior of our supply chain, our ability to manage our business to have strong earnings and cash flow leverage, factory utilization, whether the expected growth in the markets we serve materializes, our ability to maintain and improve our gross margins and realize our bookings, the financial performance of our subsidiaries and Emerging Technology Division, our ability to outgrow the market in revenue once the economy recovers and other risks described in our filings with the Securities and Exchange Commission. We assume no responsibility to update any such forward-looking statements.
Cypress, the Cypress logo, PSoC, CapSense, PowerPSoC and West Bridge are registered trademarks of Cypress Semiconductor Corp. Programmable System-on-Chip, PSoC Creator, TrueTouch, OvationONS, FirstTouch, Quad Data Rate and QDR are trademarks of Cypress Semiconductor Corp. ARM and uVision are registered trademarks and Cortex is a trademark of ARM Ltd. DoCoMo is a registered trademark and PRIME series is a trademark of DoCoMo Inc, Japan. Windows is a registered trademark of Microsoft Corp. All other trademarks or registered trademarks are the property of their respective owners.