From a recent Mad Money show:"I warmed up to this one, then I left it. I got that one wrong."

Risk Reward. Solar products

From a recent Mad Money show: "Things are pretty good at Cypress. I want to be a buyer there."

Cramer Interviews Cypress Semiconductor CEO: In this September 26 'Mad Money' clip Jim Cramer and Dr. TJ Rodgers discuss whether chip-makers are still growing

Click here to watch the video.

Hold - Price: $25.21 on July 15
by Jefferies & Co.

Despite our belief that there is likely unlocked value in the Cypress semi business, owing to the large earnings leverage in 2008-09, given that its SunPower (SPWR, $94.42, Buy) holdings account for [about] 80% of Cypress Semiconductor's valuation, we are unable to reconcile the risk/reward profile, and remain neutral on the stock.

sunpower

Interesting stats and estimates

Cypress Semiconductor (CY) has recently increased the number of shares it plans to buy back. The chipmaker's board has authorized the repurchase of an additional $300 million shares, doubling of the ongoing buyback program to $600 million. Cypress has repurchased 12.2 million shares for $269 million since the initiation of the program in January 2007.

Cypress' sales grew 50% from a year ago to $431 million, but fell 4% sequentially. On a GAAP basis, diluted earnings per share fell to $0.04 in the December quarter, less than the $0.09 a share earned in the third quarter of 2007 and well below the $0.18 a share earned in the fourth quarter of 2006. Cypress witnessed a broad-based and unexpected decline in orders in December.

Cypress also has strong exposure to the solar-power industry, thanks to its controlling interest in Sunpower (SPWR). That was a big positive earlier in the year when solar stocks were surging.

But investors' taste for solar companies has cooled, sending shares of Sunpower down more than 50% in the last three months. The costs associated with producing solar energy are still very high, which bodes ill in the face of a slowdown in consumer spending. As noted earlier, Cypress' core semiconductor market is also softening.

Cypress' shares have fallen some 50% since hitting the 52-week high in late December. And a tepid economic environment this winter is likely to keep shares depressed in the near-term. Earlier this week, Cypress also announced problems rolling over $67.8 million in short-term debt due to trouble in the auction-rate market. That's another reason to stay on the sidelines for now, despite the appeal of large stock buybacks.

Sunpower

Cypress' board authorized the company to add $300 million to its buyback plan, doubling the size of the program and bringing the grand total to $600 million. The timing and the exact repurchases will depend on market conditions. Since the programs inception, the company has spent $269 million repurchasing 12.2 million shares, leaving $331 available for repurchase.

On January 24th, Cypress reported fourth quarter and full-year earnings, which was a mixed bag. The company reported earnings of 24 cents a share, which was just short of guidance in the range of 26 to 28 cents a share. Cypress President and CEO T.J. Rodgers blamed the weak quarter on an industry wide consumer-segment slowdown.

On a positive note, revenue came in at a record $1.6 billion, up 46.2% from 2006 revenue of $1.09 billion. Fiscal year 2007 diluted EPS increased 60.8% to 82 cents a share, compared with 51 cents a share in 2006. Management expects the normal first-quarter softness; however, they also anticipate record revenue again in 2008.

Rodgers added, "Cypress remained nicely profitable in a softening semiconductor market in the fourth quarter with non-GAAP1 semiconductor gross margin reaching 48.8%. Our balance sheet contains not only $1.56 billion in cash and equivalents, but a 90% controlling voting stake in SunPower. It will provide many opportunities for us to drive shareholder value in 2008 and beyond."

Suji de Silva from Kaufman Bros Equity Research remains positive on the stock, "Our core thesis of secular mix and restructuring improvement remains intact, despite the weaker fundamental outlook, and we continue to see a potential divestiture of the SPWR stake as a potential catalyst for the name. We maintain our buy rating, reflecting the significant upside in Cypress's core semi business."

negative free cash flow