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Window Onto Apple Sales Trend: Shades Drawn

Looks like the spies on Apple (AAPL) might need a new mole soon. Apple supplier Cirrus Logic (CRUS) just lost a bit of its cache as an insider.

CRUS Chart

CRUS data by YCharts

A Barclays analyst recently revealed that a certain Cirrus amplifier socket had been replaced with a competitor’s part in Apple’s new iPad Air, which went on sale Nov. 1. That lost contract could shrink Cirrus’ 2014 revenues by as much as $40 million, or about 5%, according to a report at Zach’s Research. Cirrus supplies several components for Apple products, including older model iPads, and it derived some 80% of its overall revenues last quarter from Apple, according to its latest 10-Q filing with the SEC.

Of course that’s bad news for Cirrus, which as been struggling to diversify its customer base since Apple’s growth streak slowed last year. Investors fear that Cirrus’ other Apple contracts could fall also. With its revelation, Barclays reiterated an underweight rating that it had assigned to the stock just two weeks earlier, when Cirrus’ earnings results inadvertently gave credence to rumors that Apple was planning to launch a discount iPhone. Cirrus’ profit margins shrank.

CRUS Gross Profit Margin (TTM) Chart

CRUS Gross Profit Margin (TTM) data by YCharts

Further loss of Apple business for Cirrus also would be a blow to the thousands of tech and stock detectives that follow Apple. Apple usually discloses as little as legally possible about its business and swears its suppliers and contractors to secrecy, and the secrecy has created an industry dedicated to teasing out details of Apple operations that the company won’t disclose. Cirrus has long been a source of clues about Apple, because so much of its financials are dependent on Apple decisions. In the past, Cirrus’ 10-Q disclosures have helped Apple competitors and investors suss out market-moving details, such as pricing and launch dates for Apple products, as well as the success of those new products.

According to reports, Cirrus lost the amplifier contract to Maxim Integrated Products (MXIM), whose $2.4 billion in annual revenues are about three times higher than what Cirrus collects. There’s no mention of Apple in Maxim’s SEC filings.

MXIM Chart

MXIM data by YCharts

Dee Gill, a senior contributing editor at YCharts, is a former foreign correspondent for AP-Dow Jones News in London, where she covered the U.K. equities market and economic indicators. She has written for The New York Times, The Wall Street Journal, The Economist and Time magazine. She can be reached at editor@ycharts.com. Read the RIABiz profile of YCharts. You can also request a demonstration of YCharts Platinum.

Read more articles about: Company Analysis  tech stocks   

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