George Soros Increases His Stake in Cypress Semiconductor Corp.

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Jul 19, 2015

George Soros (Trades, Portfolio) recently increased his position in Cypress Semiconductor Corp. (CY, Financial). Soros is the chairman and lead investment manager of Soros Fund Management, currently structured as a family office with approximately $9.0 billion in equity assets under management. The firm is primarily responsible for managing the wealth of the Soros family.

In the first quarter of 2014, Soros rebought shares of Cypress after selling out in the second quarter of 2011. Since the first quarter of 2014 Soros has upped his stake in Cypress to a total of 17,666,666 shares. In his most recent purchase on June 29, he added 4,450,000 shares to bring the total share of Cypress in his portfolio to 2.26%. Following the buy, his position in technology increased to 12.04% in the sector overall.

Cypress is primarily a manufacturer of semiconductors. It has a dominant position in the technology industry and owns a number of wholly-owned subsidiaries as part of its business model. On March 12, 2015 Cypress reported the completion of its most recent acquisition, adding Spansion, Inc. to its business. Spansion’s product offerings will be integrated within nearly all of Cypress’ business segments. The acquisition was fully reflected in Cypress’ first quarter earnings results reported on April 30.

In Cypress’ first quarter earnings announcement it reported revenue of $209.1 million with a net loss of $87.9 million resulting in earnings per share of -$0.45. The company’s earnings for the quarter were significantly affected by the acquisition of Spansion. For the quarter Spansion added $35.25 million in revenue and the acquisition costs included a $107 million charge for inventory reserves which significantly affected gross margin and earnings per share for the quarter. At -$0.45, earnings per share missed the $0.09 average expected earnings per share estimate for the quarter. Going forward the Spansion business will be integrated into all aspects of Cypress’ current business and its reporting segments will continue to remain the same.

While Spansion dominated the majority of attention during the first quarter, revenue growth from the firm’s Emerging Technologies business segment was also noteworthy. Revenue in Emerging Technologies was up 76% from the first quarter of 2014. Cypress is scheduled to report second quarter earnings on July 23. The earnings report should provide further insight on how the Cypress and Spansion businesses are being integrated.

In the first half of the year the market has been skeptical of Cypress’ integration of the Spansion business. Year-to-date the stock price has traded within a range from $15.95 to $11.50. For the year it’s down 18.28% with a most recent closing price of $11.67. Soros’ share buys of Cypress are likely to help boost the market’s confidence in the company’s integration of the newly acquired business.

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