Apple's Leaves Look Wilted


Jim Jubak Image Jim Jubak Founder and Editor,

However, investors who recognize that the company's earnings are very dependent on product cycles can probably pick up a decent bargain here, writes MoneyShow's Jim Jubak, also of Jubak's Picks.

Apple (AAPL) doesn't report earnings until April 23-which has put Wall Street analysts and investors deep into "reading the tea leaves" mode.

The most recent leaves come from Cirrus Logic (CRUS), a supplier of audio chips for the iPhone and iPad. On Tuesday, Cirrus Logic reported that it would take an inventory reserve charge of $23.3 million in its fiscal fourth quarter, which ended in March.

The bulk of that-$20.7 million-comes from a single, unnamed, high-volume customer. Since Apple accounts for 90% of revenue at Cirrus, everyone on Wall Street assumes that the customer in question is Apple. It looks like Apple switched to a newer product from Cirrus during the quarter and that Cirrus got stuck with extra inventory.

But what's it all mean? All the interpretations I've seen today are negative. For example, some analysts have argued that Cirrus got stuck with extra inventory of the older chip after the switch because sales of iPhones and iPads had fallen below projections.

Another set of comments has argued that the timing of this announcement from Cirrus Logic suggests that Apple's next refresh of its iPad product line is behind schedule.