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Tracing the Impact of the Cypress 3.0 Strategy

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Strategy yielding consistent growth

About one year ago, Cypress Semiconductor (CY) committed to a growth plan that it named Cypress 3.0. Under this strategy, Cypress was supposed to focus on developing and marketing embedded solutions aimed at markets that are growing more rapidly than the overall semiconductor industry.

One year later, the management says that so far the strategy has been a good one. According to Cypress CEO (chief executive officer) Hassane El-Khoury, continued execution of the plan has started to pave the way for consistent growth in both the top- and bottom-line metrics (QQQ) (XLK).

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Revenue up 30%

In 2Q17, Cypress’s revenue rose 11.6% sequentially and 30.1% YoY (year-over-year) to $593.8 million. The top-line figure topped the consensus estimate by more than $46.9 million.

Cypress has posted double-digit YoY top-line growth for the past 12 months and has exceeded its consensus targets by at least $4.0 million.

Cypress’s bottom line has also improved consistently over the past 12 months, with the company posting adjusted EPS (earnings per share) of $0.21 in 2Q17.

Cypress outlines its priority sectors

As part of its growth plan, Cypress is doubling down on its efforts to pursue opportunities in sectors such as USB-C technology, automotive and IoT (Internet of Things) wireless connectivity.

Although Cypress seems to have found a working growth plan, succeeding in the semiconductor industry is no longer a walk in the park. Cypress has to constantly watch its back for competitive threats from Microchip Technology (MCHP), ON Semiconductor (ON), and Semtech (SMTC).

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