By Jim Oberweis, Jr., editor The Oberweis Report

We expect that 2010 will be better for technology stocks. Even after a strong year in 2009, they still have a long way to go to compensate for the carnage of 2008.

In particular, bet on companies building the latest generation semiconductors or facilitating greater network bandwidth. In particular, we like new pick Cirrus Logic (NASDAQ: CRUS).

Technology’s lost decade is over. According to Gartner Group, global semiconductor industry capital spending declined 32% in 2008 to $31 billion and further declined an estimated 43% in 2009. Capital investments can be put off for a period of time, but eventually technology companies have to keep up.

Indeed, Gartner Group predicts better days ahead for semiconductor equipment companies, and estimates capital spending will expand 45% over the trough levels of 2009.

While risk remains that economic problems are not yet over, carefully selected niche-oriented small-caps have the potential to buck the turmoil of the larger problems facing the country.

Cirrus Logic Inc. develops high-precision analog and mixed-signal integrated circuits for a broad range of audio and energy markets.The company delivers highly optimized products for consumer and commercial audio, automotive entertainment, and targeted industrial and energy-related applications.

Cirrus has more than 1,000 patents protecting countless products that include digital-to-analog converters, codecs, interface products, volume control IC’s, and digital amplifiers. The company’s products can be found in MP3 players, smart phones, satellite radios, digital utility meters, and seismic sensors.

During the nine-month period ended December 26, 2009, audio products represented 72% of revenue while energy products represented 28%.

The company has one end customer (believed to be Apple) that purchased, through mul-tiple contract manufacturers, approximately 40% of the company’s sales for the three-month period ended December 26, 2009.

In the company’s latest reported third quarter, sales increased approximately 49% to $65.2 million from $43.8 million in the third quarter of last year. Cirrus Logic reported non-GAAP earnings per share of $.19 in the latest reported third quarter versus $.07 in the same quarter of last year.

Clients of Oberweis Asset Management own approximately 180,000 shares. These shares may be appropriate for risk oriented investors.

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