paul..research report on cyrx
COMPANY :Cyrix Corp
TICKER :CYRX
EXCHANGE:NNM
BUSINESS:Mfr computer processor prd
NUMBER OF EMPLOYEES: 389
CORPORATE INFORMATION
Incorporated in Delaware in 1988
2703 North Central Expressway
Richardson, TX 75080
Phone: (214) 994-8388
Website, cyrix.com
Chrmn, H. B. Cash
Acting Pres & CEO, J. Swent
Pres & CEO, G. D. Rogers
SVP-Fin & Admin., J. Swent
S&P INVESTMENT OVERVIEW AS OF: 01/31/97
Cyrix designs, develops and markets IBM-compatible microprocessors
for personal computers. In 1995, the company began to focus on its
next-generation processors, the Pentium-class 5x86 and 6x86 chips.
Volume production began in the 1996 second half, but the products
have experienced a lack of acceptance by OEMs, who have more
confidence in market leader Intel. In October 1996, Cyrix announced
price reductions on its entire 6x86 product line, in an effort to
boost market share. In December 1996, CEO G.D. Rogers resigned, but
he will remain a director.
S&P EVALUATION AS OF: 01/31/97
S&P Stock Appreciation(STARS) Rank: 0
S&P Earnings/Dividend Rank: NR
ANALYST CONSENSUS AS OF: 02/02/97
Average Quality Consensus
Opinion(AQO) Recommendation
January 1997 0.87 Buy/Hold
December 1996 0.56 Hold
November 1996 0.56 Hold
August 1996 0.50 Hold
February 1996 0.67 Hold
February 1995 0.72 Hold
CONSENSUS BREAKDOWN
By National Firms: Buy
By Regional Firms: Hold
By Non-brokers: NRA
No. of % of 1 Mth 3 Mth ---- By Source ----
Ratings Total Prior Prior Nat'l Reg'l Non-Brk
Buy 1 25.0 3 3 1 0 0
Buy/Hold 1 25.0 3 2 0 1 0
Hold 1 25.0 5 6 0 1 0
Weak Hold 0 0.0 1 1 0 0 0
Sell 0 0.0 1 1 0 0 0
No Opinion 1 25.0 2 2 0 0 1
======= ====== ===== ===== ===== ===== ======
TOTAL 4 100.0 15 15 1 2 1
CONSENSUS EARNINGS PER SHARE FORECAST AS OF: 02/01/97
Fiscal Year End (See footnote 1): December
Next Earnings Report Expected Date: 04/19/97
AVERAGE PERIOD TO HIGH LOW NUM --NUM REVISED--
FISCAL EPS EST PERIOD %CHG EST EST ESTs UP DOWN
1997 0.77 -59.0 1.25 0.50 4 1 0
Qtr 1 -0.09 -134.6 -0.09 -0.09 1 0 0
Qtr 2 0 0 0
Qtr 3 0 0 0
Qtr 4 0 0 0
VALUATION COMPARISON AND RISK-REWARD ANALYSIS
AVERAGE HIGH LOW
GROWTH RATE COMPARISON
Next 5 Yrs Projected Ann EPS Growth(%):
Past 5 Yrs EPS Annual Growth(%): NM
P-E COMPARISON
Implied 1997 PE(Current Price/1997 Est): 33.4 51.5 20.6
Past 5 Years Average PE Ranges: 29.1 42.7 15.5
Current PE(Past 12 Mth EPS):
Last Fiscal PE(1996 Close/1996 Act. EPS): --
DOWNSIDE RISK ANALYSIS
Highest Yield in Past 5 Yrs(%):
Lowest Price Supported by Dividend($):
Past 5 Yrs Average Low Price: 16.02
Recent Lowest Price: 11.50
Using Average Low PE & Lowest EPS Estimates
Low Price Supported by 1997 EPS: 7.75
PROJECTED PRICE RANGE
Current Price(01/31/97): 25.75
Projected 1997 Price Range: 22.41 53.38 16.02
PROJECTED RISK-REWARD FROM CURRENT PRICE
% CHG IN ----MAXIMUM---- GAIN LOSS RELATIVE TO
PROJ AVG % GAIN % LOSS RATIO PROJ PRICE RANGE
Thru 1997: -13.0 107.3 37.8 2.8 Lower Range
EARNINGS PER SHARE ESTIMATES & TRENDS AS OF:02/01/97
AVERAGE NUM CHANGES % CHANGE
FISCAL EST'D EPS DURING MTH IN AVG EST
1997
December 0.50 0 -4
November 0.52 3 8
October 0.48 4 -28
September 0.67 3 -21
August 0.85 2 -18
July 1.04 4 -31
June 1.51 8 -49
1998
December 1.85 0 0
November 1.85 0 0
October 1.85 1 16
September 1.60 0 0
August 1.60 0 0
July 1.60 0 0
*Additions or deletions to coverage may cause percent change in
in average estimates without any analyst changes.
KEY STATISTICS AT A GLANCE
PRICE PERFORMANCE AS OF: 01/31/97
Current Price: 25.75
12 Month High: 36.50
12 Month Low: 11.50
Beta:
SHAREHOLDING
Book Value Per Share($): 6.52
Market Capitalization($Mil): 502
Shares Outstanding(000): 19,507
% Held by Institutions: 14.0
Insider Sentiment: NA
PAST EARNINGS
Actual EPS FY(1996) (See footnote-1.27
Past 12 Mths EPS: -1.27
Current P-E(Past 12Mth EPS):
Past 5 Years High PE: 63.8
Past 5 Years Low PE: 9.8
DIVIDEND
Indicated Ann. Dividend Rate($): Nil
Current Yield(%):
5-Year Div. Annual Growth(%):
Div. as % of Past 12Mth EPS:
DIVIDEND HISTORY
No cash dividends have been paid. The company intends to retain
its earnings for reinvestment in its business.
PRICE AND PE HISTORY
ANNUAL PRICE RANGES
1997 1996 1995 1994 1993 1992
Close 25.75 17.75 23.00 19.62 20.25
High 26.12 36.50 49.75 47.50 41.37
Low 17.37 11.50 16.75 18.50 16.00
P-E RATIO RANGES
High NM 63.8 25.3 39.0
Low NM 21.5 9.8 15.1
TECHNICAL ANALYSIS
Short Term Trend(2-3 Mths): Bullish
Medium Term Trend(3-5 Mths): Bullish
Long Term Trend(5-8 Mths): Bullish
Support Price: 24.5
Resistance Price: 0.0
Current Relative Strength: Stronger than S&P 500
QUARTERLY FINANCIAL HISTORY AS OF: 01/31/97
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Year
Revenue($Mil)
1996 51 27 33 71 183
1995 85 50 53 39 228
1994 46 58 68 73 246
1993 29 32 31 32 125
Net Income($Mil)
1996 1 -15 -6 -4 -24
1995 17 7 0 -9 15
1994 5 9 10 12 37
1993 6 7 4 1 19
After Tax Margin(%)
1996 3.8 -56.8 -21.0 -6.2 -13.5
1995 20.5 14.9 1.0 -25.4 6.8
1994 11.1 15.7 15.4 17.4 15.3
1993 21.8 22.5 15.7 3.6 15.7
Earnings Per Share($)
1996 0.10 -.79 -.36 -.23 -1.28
1995 0.88 0.38 0.03 -.49 0.78
1994 0.26 0.46 0.52 0.63 1.88
1993 0.37 0.42 0.25 0.06 1.06
Period To Period EPS Change(%)
1996 -88.6 -307.9 -1300.0 -- -264.1
1995 238.5 -17.4 -94.2 -177.8 -58.5
1994 -29.7 9.5 108.0 950.0 77.4
1993 116.3
Period To Period Revenue Change(%)
1996 -39.4 -46.1 -38.2 82.6 -19.7
1995 84.0 -14.4 -21.3 -46.5 -7.4
1994 59.3 82.9 118.7 122.5 96.7
1993 71.6
Dividends Paid($)
INCOME COMPONENT ANALYSIS AS OF: 01/31/97
1995 1994 1993 1992 1991
Return on Equity(%): 11.5 35.8 20.3 N/A
Return on Assets(%): 6.7 24.1 12.4 N/A
Return on Revenue(%): 17.7 26.6 28.1 21.5
Effective Tax Rate(%): 34.0 34.5 35.4 38.0
Cash Flow($Mil): 35 47 25 10
Interest as % Cash Flow: 19.2 1.5 2.5 2.8
Cap. Exp as % Cash Flow: NM 50.8 59.2 60.5
Dividend as % Cash Flow:
BALANCE SHEET STATISTICS AS OF: 01/31/97
1995 1994 1993
Assets($Mil)
Cash 44 59 50
Non-Cash 84 73 42
Total Current Assets 129 132 93
Non Current 63 22
Total Assets 129 196 115
Liabilities($Mil)
Current 60 52 23
Non Current -77 18 7
Total Liabilities -17 70 31
Shareholders' Equity 146 125 84
Total Equity/Liabilities 129 196 115
OPERATION ANALYSIS(For most recent year)
RATIO ANALYSIS
Debt/Equity Ratio: 42.7
Sales Per Employee($): 539,845
COVERAGE ANALYSIS
Interest Coverage:
Interest as % of Debt: 10.8
PAST 5 YR GROWTH RATE ANALYSIS
Annual Revenue Growth(%): 32.8
Annual Earnings Growth(%): NM
Annual Dividend Growth(%):
SHARES AND CAPITALIZATION
Long Term Debt: $137,000,000 (09/96).
Common Stock: 19,507,000 shs.
Shareholders: 500 (1996).
BUSINESS SUMMARY
Cyrix Corp. designs, develops and markets IBM-compatible
microprocessors and math coprocessors for the personal computer
industry. The company uses a design system consisting of industry
standard and Cyrix proprietary hardware and software design
components, continued refinement of product specifications,
simulations and testing for IBM compatibility.
In 1994, Cyrix's dominant product category was 486 instruction-set
compatible microprocessors; revenues from its Cx486DX and Cx486DX2
chips accounted for about 75% of the company's product revenue in
1994. However, in 1995, selling prices and demand for 486 products
declined dramatically, and CYRX wrote off its entire inventory of
486 products in the year's fourth quarter. Cyrix is now concentrating
on its new microprocessor products targeted at the high performance
segment of the personal computer market. Its new processors include
the the 5x86, a full-featured Pentium-class microprocessor to
compete with Intel's offerings in the fifth-generation x86
marketplace; and the 6x86, based on superscalar and superpipelined
architectures. Shipments of the 5x86 and the 6x86 began in mid-1995.
CYRX does not manufacture its own products but instead utilizes the
services of qualified semiconductor manufacturers that offer leading
CMOS process technologies. It currently has an agreement with
SGS-Thomson Microelectronics pursuant to which SGS-Thomson
manufactures products for sale to the company through December 1997.
SGS-Thomson also has the right to manufacture and sell certain
current and future Cyrix products under its own name. In April 1994,
CYRX signed an agreement whereby IBM Corp.'s Microelectronics
division will manufacture specified quantities of Cyrix-designed
products for sale to the company through December 1999 at defined
prices. Cyrix also made a capital equipment investment of about $88
million in an IBM facility in 1995. In March 1996, the company
announced a five year agreement with EDS, wherein it will use EDS'
logistics and integration services to provide Cyrix-brand personal
computers. Initial sales began in April 1996.
Cyrix sells most of its products to original equipment manufacturers.
In 1995 and 1994, sales to international customers accounted for 66%
and 52%, respectively, of the company's revenues.
Research and development expenditures amounted to $29.1 million (14%
of net sales) in 1995 and $24.8 million (10%) in 1994.
INDUSTRY OUTLOOK
Shares of semiconductor issues continue to rally strongly, as the
inventory correction that caused the stocks to sell off sharply from
late 1995 to mid-1996 has come to an end. Improved business
conditions are evidenced by the SIA's book-to-bill ratio, which
rose from 0.79 in March 1996 to 1.10 (preliminary) in December.
It is interesting to note that this rise came in spite of continued
weak prices for memory chips, which indicates strong unit demand.
Despite the rally, we feel further gains in semiconductor shares are
possible, although we caution that the "easy money" has been made
and that selectivity is growing more important.
The major culprit for the slowdown earlier in 1996 was
lower-than-expected personal computer (PC) sales in 1995. While
overall PC sales grew 25% for all of 1995, growth fell short of the 30% that the industry had expected. This shortfall caused PC
and motherboard makers to hold excess inventory at year-end,
resulting in a negative ripple effect. In addition, manufacturers
of telecommunication equipment, another major user of semiconductors
were also holding an oversupply of chips. This was due in part to
unexpected government delays in setting telecommunications
regulations.
The industry has historically been subject to intense boom and bust
cycles. While we expect this to continue, the long-term bias will
be towards continued growth. For example, after rising from $50
billion in 1990 to $144 billion in 1995, the world-wide
semiconductor market shrank to an estimated $129 billion in 1996,
due to the inventory correction and lower memory prices.
A moderate recovery of between 7% and 15% is expected in 1997,
before growth reaccelerates to levels approaching 20%. By the year
2000, world-wide revenues should exceed $200 billion, given
favorable economic conditions. This growth will be fueled by many
factors including the mass market adoption of PCs, the increasing
content of semiconductors in electronic equipment, appliances,
cellular phones and automobiles. With greater end-user diversity,
the industry will be less dependent on the PC for growth, which we
view as a plus. In addition, industry growth will get a lift from
continued economic development in the Asia/Pacific region and other
developing countries.
NEWS HEADLINES
01/17/1997:
Jan. 16, 1997, Cyrix Corp. announced Dec. 1996 fourth quarter loss
per share, $0.23 vs loss of $0.49 for same period a year ago. Annual
loss, $1.27 vs earnings of $0.78 for the prior year. Loss before
taxes of $38,499,000 and income before taxes of $23,776,000 for the
1996 and 1995 years include income of $2,000,000 and $10,000,000
from litigation settlement. Results for the 1996 year exclude
extraordinary charge of $0.06 per share from the extinguishment of
debt.
12/11/1996:
2:30 pm... DROPPING COVERAGE OF CYRIX (CYRX 20-3/4)... Shares
previously rated as hold... Stock may trade over short term based on
speculation as to what co. will do now that CEO Jerry Rogers has
resigned... If co. does seek strategic partner, believe it is highly
debatable at what price any potential buyout or other offer might
emerge. /M.Basham
12/10/1996: Dec. 9, 1996, Cyrix Corp. (CYRX) said Jerry Rogers
stepped down as president and chief executive officer, but will
continue as a director.
10/21/1996:
Oct. 17, 1996 Cyrix Corp. announced Sept. '96 three-month loss per
share of $0.36 vs earnings of $0.03 for same period a year ago.
Nine-month loss of $1.05 vs earnings of $1.28 for same period a year
ago. Based on average common & common equivalent shares. Results
for 1996 exclude net charge of $0.06 per share representing loss on
early extinguishment of debt. Note:Results for the three and
nine-month periods of 1996 include a credit of $2,000,000 and in the
nine-month period of 1995, a credit of $10,000,000, representing
gains on litigation settlement.
10/18/1996: UP 2 3/8 to 20... Post narrower than expected $0.36 3Q
loss vs. $0.03 EPS on 41% lower revenues, higher operating costs...
Oppenheimer raises estimates.
09/30/1996: UP 1 1/2 at 16 3/8... Needham upgrades to buy from hold,
details unavailable... Co. cites Needham comments.
09/20/1996: Sept. 19, 1996, Cyrix Corp. (CYRX) said Jack Kemp
resigned as a director and Gary Stimac was elected a director
09/19/1996: 11:35 am... CYRIX CORP (CYRX 13-1/4) DOWN 7/8,
OPPENHEIMER CUTS ESTIMATES... Analyst James Poyner tells MarketScope
sees further downside for CYRX as lack of market acceptance of co.'s
chip continues... Notes IBM selling same chip at lower price level..
. Inventories building as co. has take or pay agreement with IBM...
Says this consuming co.'s cash, deteriorating balance sheet...
Widens 1.43 '96 loss estimate to $1.97 loss from ops.... Says had
$0.65 '97 EPS estimate, but at these run rates, now sees $1.25
loss... Says even though stock has fallen to $13 range, sees only
$5 to $6 equity value on balance sheet... Reiterates underperform rating./S.Trombino
09/19/1996: DOWN 7/8 to 13 1/4... Oppenheimer cuts estimates,
reiterates underperform... Co. no news, notes Oppenheimer comments.
07/24/1996:
July 19, 1996, Cyrix Corp., announced a June '96 three-month loss
per share of $0.75 vs earnings of $0.38 for same period a year ago
, and a six-month loss of $0.67 vs earnings of $1.26 for same period
a year ago. Results for both periods of 1996 exclude an
extraordinary charge of $0.05 per share from the early extinguishment
of debt. Net income of $7,494,000 and $24,979,000, for the three-and
six-month periods of 1995, include a pre-tax gain of $10,000,000
from litigation settlement.
06/27/1996: 10:20 am... CYRIX CORP. (CYRX 15-1/2) UP 1-1/4, GOLDMAN
INITIATES COVERAGE, ADDS TO RECOMMENDED LIST... Analyst Rajiv
Chaudhri tells salesforce while lack of visibility has pushed
stock down to historic lows, believes 2Q problems an aberration...
Says co. actually better positioned now than 2 years ago... Says
co.'s 6x86 processor has won rave reviews... Believes co. can get
back to 5% market share... Sees $0.21 '96 loss, $2.00 '97 EPS./K.Lipani
06/27/1996: UP 2 1/2 to 16 1/2... Goldman initiates coverage, adds
to recommended list... Co. notes Goldman comments...
06/26/1996:
8:40 am... DOWNGRADING CYRIX (CYRX 14-1/2***) TO HOLD FROM
ACCUMULATE... Co. expects 2nd quarter loss exceeding $15 million
due to aggressive pricing and 6x86 customer program delays...
Believe this loss mostly due to customer issues created by Intel's
dominant market position, as CYRX's microprocessor line is
technologically very competitive with Intel... See $0.40 loss in
'96... cutting '97 EPS estimate to $1.50 from $2.95... Believe shares
worth holding as co. has good products, just taking longer to
achieve market acceptance of Intel alternative. /M.Basham
06/25/1996: DOWN 1 1/2... Co. notes Needham downgrades to hold from
buy... Further details unavailable... Yesterday co. forecasted 2Q
loss in excess of $15M.
06/24/1996: DOWN 5 3/4... Sees 2Q loss in excess of $15M...
Cites aggressive pricing, 6x86 customer delays... Lehman,
Oppenheimer cut estimates... |
