Cypress Semiconductor Corporation (CY)

May 23, 2012 9:30 am ET

Executives

Brad W. Buss - Chief Financial Officer, Principal Accounting Officer, Executive Vice President of Finance & Administration and Corporate Secretary

Analysts

Blayne Curtis - Barclays Capital, Research Division

Presentation

Blayne Curtis - Barclays Capital, Research Division

Compare to:
Previous Statements by CY
» Cypress Semiconductor's Presents at JPMorgan Technology, Media and Telecom Conference (Transcript)
» Cypress Semiconductor's Management Present at Bank of America Merrill Lynch 2012 Global Technology Conference (Transcript)
» Cypress Semiconductor's CEO Discusses Q1 2012 Results - Earnings Call Transcript

All right. We'll go ahead and get started. Thanks for joining. Welcome to the second day of Barclays' Global TMT Conference. Next presenter is Cypress Semiconductor. You all probably know Brad Buss, Chief Financial Officer. He's going to do a couple of quick slides, but most of you probably know the story, and then we'll do some Q&A, and then I'll open it up at the end. There's no breakout so ask your questions now. Thanks. Brad?

Brad W. Buss

Thanks, Blayne. Glad to be here, even though I do miss the crown a little bit. So, yes, I'm just going to go through a couple of quick things. Obviously, the obligatory Safe Harbor for, not only this preser [ph] but everything I talk about. We do a lot of cool stuff in our 10-K, so we encourage you to take a look through that.

So I tried to wrap in this one slide what I think, we feel the proposition is for the company, and it also covers a lot of the stuff that we talk to investors with. Big focus on proprietary products, our PSoCs, even a lot of our USB. I mean, north of our -- 50% of our portfolio's really programmable these days, which is incredible. Big player in mobile phones and mobility. You go back 3 years, we did nothing in cellphones, obviously a monster market driven by touch, and I'm sure we'll touch on that quite a bit, as is in most of my meetings.

PSoC, which really birthed us and allowed us to get into touchscreen business, is a massive opportunity for us. I mean, we've grown very well on that and there's a $15 billion TAM between the microcontroller, the analog and some of the logic. So even if you're a total bear on semis in the world, and that stays flat for 5 years or even goes down; if you're a monster bear, we're going to be eating into a multibillion-dollar TAM for quite a few years. I'll be retired before I think we see a full penetration there.

And then again, touch is a big focus of what we've done. It's a big chunk of our growth. But it really is only about 20% of the company. A big chunk of what we do is also in the SRAM and the USB areas, and we're leaders in both of those. We've got a consolidation going in the SRAM end of it and we have the USB 3.0 coming in the USB end of it which is really the biggest opportunity that we've seen in USB in years.

Unlike a lot of other companies, especially in our very conservative semiconductor industry, we have a division called our Emerging Tech division.

We're very opportunistic, a lot of greenfield sites. SunPower came out of that, which fortunately we spun off years ago, for those of you that are still playing the solar. So we've got a couple of neat things in there, one of them being DecaTech, and I'll -- I'm sure we'll touch on that later.

The balance sheet's in great shape. We have plenty of room to lever up. We have a very high EBITDA and free cash flow situation. And we actually have a real yield out there. We're yielding, unfortunately, due to the stock price, more than increasing, but about 3.5%. So we're up there with all the big analog players, and I say, I think we have much better growth opportunities than some of those players as well. The stock, obviously, is near at a 52-week low. Our CEOs ponied up quite a few multimillions in buying some options and holding them. And the management teams combined owns close to 10% of the company.

I won't spend a lot of time on basically our organization. That's pretty detailed in our press release and in our financial stuff. The one thing I did want to touch on was just the cross-section of end markets. We play with a lot of the big players, and as you can see in the consumer white good area, we're in with really the guys that matter. If you're not in with some of these bigger players, as a semiconductor company, it's pretty tough. And I'm pretty excited that in our top 5, we have a couple of the major guys that I think we'll continue to see strong growth. We only have 1 10% customer over the last couple of quarters, a very well known company in the handset area. And other than that, we're fairly diversified between end markets as well as the customer base.

Just to give you a look at kind of the PSoC end of it, right? This is our PSoC. Most of it's really been our PSoC 1. So we've had pretty strong ramp up in over 1.2 billion in units.

I like this chart here as it shows us we've ramped up pretty rapidly as to become the #6 guy in the 8-bit microcontroller area. And this is important because this is a very fragmented market. There's north of 30 guys who play in that. And as you start thinking of touch markets and that of the analog markets, it's a very similar case. So there's great opportunity for a new company and a lot of innovation like we're driving to continue to grow in those areas.

Read the rest of this transcript for free on seekingalpha.com