Riding Apple's Coattails

NEW YORK (TheStreet) -- Apple (AAPL) announces its fourth-quarter earnings Monday after market close, and its results impact not only investors but members of its supply and partner ecosystem, as well.

Although Apple traditionally develops much of its technology in-house -- the iPad runs on a new, custom-designed chip -- the Cupertino, California-based company still relies on a vast network of external suppliers to manufacture pieces of its popular products.

Well known for its obsession with protecting trade secrets and intellectual property, Apple does not provide an official list of its suppliers and requires that its key partners maintain a strict code of silence. However, firms like iFixit and iSuppli that specialize in taking apart and analyzing gadgets have provided insight into the manufacturers of Apple's major components through "teardowns" of its products. Research has revealed that Apple relies on many of the same suppliers for the iPhone, iPod Touch and iPad.
Apple

Independent mobile game developers are another big layer in Apple's ecosystem. Apple has the largest network of game developers of any consumer electronics platform, and its iOS devices overtook the Sony ( SNE) PSP in popularity last month, according to the International Gamers Survey 2010.

Bing Gordon, a partner at venture capital firm Kleiner Perkins Caufield & Byers and a former Electronic Arts ( ERTS) exec who helps manage the iFund -- a $200 million initiative that receives advice from Apple and invests in mobile app technology -- believes investors are hot on Apple's gaming platform because of the company's reputation for quality and its previous success with launching iTunes.

"When Apple launched iTunes and the app store, those were two breathtaking changes -- there are a lot of other companies who tried to sell things digitally unsuccessfully," Gordon told TheStreet. "iTunes is a miracle."

Read on for five innovative companies riding the tide of Apple's success, from chipmakers to app developers.

Cirrus Logic

Chipmaker Cirrus Logic ( CRUS), which provides the audio chip in the upcoming iteration of the iPhone and in the iPad 2, generated about 36% of its revenue last year from Apple.

Cirrus, which has seen its shares rise almost 200% since October 2009, saw its stock price drop 15% last month on a report from the Taiwan Economic Daily News -- which analysts later deemed not credible -- that the Austin, Texas-based company had lost its slot as audio chip provider.

Cirrus boosted its first-quarter revenue earnings 118% over the same period last year to $81.9 million. It generated revenues of $221 million in fiscal year 2010, up 27% from $174.6 million the year before. The company, which closed Friday at $16.09, is set to release its second quarter 2011 earnings on October 21.

"We recognize Cirrus has tremendous momentum with its commanding position with Apple, and is the main driver of the stock's recent run," Stifel Nicolaus analyst Tore Svanberg wrote in a recent note.

Cirrus has around 500 employees, according to its annual filing.

Firemint

Australian game developer Firemint, creator of some of the top selling apps on the iPhone, credits Apple with transitioning its business model and providing it with greater growth opportunities. Firemint currently generates 80% of its revenue from the App Store, up from several years ago when the company sold its mobile game development skills exclusively to large publishers, CEO and co-founder Robert Murray told TheStreet.

Firemint's Flight Control game is one of the top selling apps on the iPhone with over three million copies sold, while its Real Racing game is among the most popular racing games on the platform, according to Pocket Gamer.

"The most incredible thing Apple did was the App Store, which has created not only an ecosystem of its own, but has defined a whole new model of digital distribution," Murray said. With the advent of the App Store, small developers like Firemint now have a channel for reaching consumers directly and a way to publish their own titles.

The company, which is fully owned by Murray, has about 40 employees.

Booyah

While mobile location-based gaming company Booyah isn't yet a household name like its rival Foursquare, its user base is skyrocketing.

The Palo Alto, California-based Booyah, which designs exclusively for the iPhone, has 3.5 million users on its popular MyTown game up, from 500,000 gamers in January. The company generates revenue through a mix of local advertising and sales of virtual goods.

MyTown is comparable to a real-life Monopoly set in which users check-in with their iPhones at real-life locations, which enables them to receive virtual currency. They can then "buy" the businesses around them using this cash.

In May, Booyah announced a partnership with Google's ( GOOG) Places Web Service, giving it access to the search giant's data set of more than 50 million locations around the world.

The company also has corporate partnerships with HP ( HPQ), H&M, Pantene, Microsoft ( MSFT), Powermat, The Travel Channel, Skittles, Oil of Olay, MTV, and Disney.

Booyah, an iFund portfolio company, has received almost $30 million in funding from vc investors at Kleiner Perkins Caufield & Byers and Accel Ventures. The company declined to comment on profitability or revenue figures. It has 54 employees.

Electro Scientific Industries

Hi-tech company Electro Scientific Industries ( ESIO) generated about 30% of its fiscal year 2010 revenue from Apple. While the Portland, Oregon-based ESI declined to comment on the specific nature of its business with Apple, Davidson & Company analyst Tom Diffely said that the company's lasers systems are used to drill micro holes, cut and etch a range of materials to create a finish on Apple's hardware casings.

ESI reported first quarter 2011 revenues of $58.5 million, up over 100% year over year. Its share price has increased about 3.8% in the last month, closing Friday at $11.60.

The company is set to report its second quarter earnings on October 28. It has around 580 employees, according to its annual filing.

Gameloft

While international video game publisher Gameloft only began developing games for iPhone two years ago, the financial rewards have been substantial. Last year, the Paris-based company generated 14% of its total $170.4 million revenue from the sale of its iPhone games, including 22% in the fourth quarter alone.

App store revenues from Gameloft's more than 100 games also grew 82% in the first half of 2010. Heavily invested in games for the iPhone, Gameloft has scaled back development on Google's Android platform.

"Google has not been very good to entice customers to actually buy products," Gameloft finance director Alexandre de Rochefort told Reuters last year. "On Android nobody is making significant revenue. We are selling 400 times more games on iPhone than on Android."

Of Gamelot's some 4,500 employees, about 1,000 of them are dedicated to working solely on the Apple platform.

--Written by Olivia Oran in New York.

>To follow the writer on Twitter, go to http://twitter.com/ozoran.

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