Audience Down 15% On Lower Chip Demand From Samsung

Audience (NASDAQ: ADNC) fell more than 15 percent on a weak outlook for the second half of 2014.

The company provides audio processors for smartphones and Samsung represented 72 percent of its recent second-quarter sales.

But Samsung recently forecast substantially lower-than-expected demand for its smartphones.

"We expect a significant financial impact for our business with Samsung in the second half of this year," Chief Executive Peter Santos told analysts in a conference call.

Deutsche Bank's Brian Modoff maintained a Hold rating Friday. "Until we see customer diversity it will continue to be a struggle for the company," Modoff said in a note cutting his price target 22 percent to $9 from $7 per share.

Pressure from both low-end cell-phones and high-end Apple "could make it hard for Samsung to bounce back," Modoff said. "So where does that leave Audience?"

It leaves them in a cost-cutting mode, according to Topeka's Suji De Silva, who maintained a Buy rating Friday although he cut his price target to $10, from $15.

De Silva said the company's competitive position is strong and cost-cutting will hasten break-even results.

Audience predicted an adjusted third-quarter loss of between $0.37 and $0.43 per share, on revenue of $25 million to $28 million.

Wall Street had predicted a loss of $0.05 per share on revenue of $41.3 million.

The company's adjusted loss of $0.20 per share on revenue of $37.5 million in the second quarter compared with analysts expectation of loss of $0.12 per share on revenue of $38.5 million.

Audience closed Friday at $8.05, down 15.5 percent.