Analyst: Supplier Ramp Could Indicate Second Fall Product for Apple



Quarterly ramp ups for Cirrus Logic in the September and December quarters might indicate that Apple is planning to release not one, but two new devices this fall. Citing guidance from Cirrus, Wells Fargo analyst Maynard Um told clients that Apple may be bringing more than just a new iPhone to market.


Cirrus Logic announced results for the June quarter on Monday, and Mr. Um noticed that the company is, “anticipating a solid ramp and guided September quarter revenues to increase roughly 70% sequentially.” The company, “expects a further ramp into the December quarter.”

More specifically, the firm guided investors to 70 percent sequential increase in revenues during the September quarter, with another sequential increase in the December quarter.

“Given the sequential growth is much higher relative to the ramp into the iPhone 4S last year, we believe it could suggest that Apple will introduce more than one product in the fall time frame,” Mr. Um wrote in the research note obtained by The Mac Observer.

You may be asking why you, an Apple observer, should care about what the Austin-based fabless semiconductor firm is doing. The answer is that Apple is Cirrus’s top client, with the iPhone maker accounting for 35 percent of Cirrus revenues in fiscal 2010, 47 percent in fiscal 2011, and a whopping 62 percent in fiscal 2012.

Accordingly, when Cirrus guides for a large uptick in revenue, it’s a safe guess that it’s because Apple put in a large order. The entire world knows that Apple will be refreshing its iPhone product line this Fall—possibly as soon as September 12th—but Mr. Um thinks that such a large sequential ramp could mean something else.

Think iPad mini.

Many believe Apple will announce a smaller iPad this fall, and while Maynard Um was careful not categorically state that Cirrus’s news is tied to that specific device, he did note that, “If Apple were to introduce an iPad mini, assuming $300 average selling price and 25 percent gross margin, every one million iPad Minis would equate to US$300 million in revenue and $0.04 in earnings per share (EPS), all else [being] equal.”

The note was released after the market’s close. During the regular session, shares in AAPL closed higher at $595.03, up $9.87 (+1.69 percent), on light volume of 13.5 million shares trading hands.

Maynard Um is maintaining his price target on AAPL at $640-$660 per share and an “Overweight” rating.

*In the interest of full disclosure, the author holds a tiny, almost insignificant share in AAPL stock that was not an influence in the creation of this article.