Audience, which specializes in noise suppression technology, had long been a staple in previous iterations Apple's iPhones. But Audience suspected it had been left off the new iPhone 5 when the company realized it had not been involved in the typical pre-launch discussions.
Peter Santos, CEO of Audience, didn't wait for confirmation and opted to informed investors about the possibility Apple would not extend their relationship, even though Apple had not yet confirmed this.
On the announcement, shares of Audience lost over 60% of their value, and dropped as low as $5.51 -- a decline of 80% from its 52-week high.This event was a testament to the dangers that exist when one company, in this case Apple, represents a significant portion of your revenue. On the heels of the company's recent earnings report, I was looking for confirmation Audience can sustain growth without Apple.
A Good Third Quarter, But...Audience reported net income of $4.9 million, or 21 cents per share, on revenue of $40.8 million. Earnings per share grew 60% year-over-year -- exceeding the $2.7 million in net income Audience earned in the third quarter of 2011. While that might look impressive, it is worth noting the company had significantly fewer shares outstanding at this point in 2011 -- 3.8 million shares compared to 23.2 million today. However, that revenue showed 55% year-over-year growth is pretty remarkable. Equally impressive was that sales grew by 22% from the second quarter. Likewise, margins were solid -- improving eight points year over year. In terms of outlook for the fourth quarter, Audience expects net income, which includes stock-based compensation as well as expenses, of $800,000 to $1.7 million, or 4 cents to 8 cents per share, on revenue as high as $38 million. Margins are projected to come in at negative five points to flat.
Moving ForwardAlthough guidance was unimpressive, the company deserves a considerable amount of credit for its third-quarter performance, particularly as this was its first full quarter as a public company. Growth indicators were positive and the company is now in the midst of expansion into markets such as China.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV