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Technology Stocks : CYPRESS Semiconductor (CY) -- Ignore unavailable to you. Want to Upgrade?

To: John Ritter who wrote (1567)	12/5/1997 11:18:00 AM
From: Jeff Parker	Respond to of 2694

S&P Rates Cypress Semiconductor Subordinated Notes B, CCR & BLR BB- NEW YORK, Dec. 5 /PRNewswire/ --Standard & Poor's today assigned its single-'B' rating to Cypress Semiconductor Corp.'s Rule 144a $175 million convertible subordinated notes due 2002 and its double-'B'-minus rating to the company's $100 million revolving credit facility. Standard & Poor's also assigned its double-'B'-minus corporate credit rating to the company. The outlook is stable. Cypress Semiconductor's ratings reflect the company's good operating performance in a highly competitive commodity market sector and its expanding communications product lines, offset by the pressures of technology evolution and aggressive pricing. San Jose, Calif.-based Cypress manufactures ''static memory'' (SRAM) and other semiconductors. The company has expanded its SRAM market share to about 7% in the last several years. SRAMs are used in pagers and cellphones, high-speed data networks, and personal computers (PC) markets where their high operating speed and low power consumption add significant value. Cypress also is the leading supplier of PC clocks, and sells other memory and data communications chips. The higher profitability of Cypress' nonmemory products alleviated the impact of the severe industry-wide memory sector decline in 1996. Revenues have begun to recover from the 1996 price collapse, while operating margins had been above 18% even in the weakest quarter of 1996 and have been above 25% for the last four quarters. Still, further profitability expansion is expected to be constrained by accelerating technology-driven memory price declines in coming years, potentially offset by contributions from non-SRAM products. Generally good working capital performance and moderate capital spending should permit some free cash flow generation at likely growth rates and profitability levels. Liquidity of $241 million (including proceeds from the recent note offering) at Sept. 30, 1997 should provide some of the resources necessary to facilitize the next wafer factory, once market conditions recover further. The company's revolving credit agreement is rated double-'B'-minus, the same as the corporate credit rating. The bankers would be expected to fare the same as other unsecured creditors in the event of a bankruptcy. OUTLOOK: STABLE Anticipated aggressive market conditions are likely to continue to pressure the commodity SRAM sector which, combined with likely growth initiatives, limits upgrade potential over the next few years. Cypress' expanding position in more profitable niche markets provides a good degree of downside protection, Standard & Poor's said. -- CreditWire