Shares of touch-sensor maker Cypress Semiconductor ( CY ) are down 74 cents, or over 6%, at $10.86 as several analysts this morning cut estimates and price targets after the company yesterday morning missed Q2 revenue estimates and forecast this quarter's results well below consensus. The stock actually got one downgrade today, from Charlie Anderson of Dougherty & Co ., who cut the stock to Neutral from Buy, with an $11 price target. But there's a divide today between those who say the worsts is in the stock at this point, and those who say the company faces long-term challenges. The immediate problem is the company is trying to find growth outside of the two dominant handset makers, Apple ( AAPL ), and Samsung Electronics ( 005930KS ). Glen Yeung, who has a Neutral rating on the stock, cut his price target today to $13 from $17, writing that Cypress is pressed to get around the tremendous market share of the iPhone and Samsung's phones based on Google 's ( GOOG ) Android: With the two largest handset vendors using, or moving towards using other solutions for touch controllers, Cypress and its competition will cobble their respective shares from the handset market that remains (feature phone/low-end smartphone). One concern we have is Cypress’s belief that in-cell won’t be important for the market outside of Apple. With the iPhone 5 likely to use in-cell, and the market likely to follow as it has in the past, there is risk Cypress may miss this trend (though their chips are in-cell ready). Similarly, our second concern is Cypress’s expectation that touch-enabled Win8 systems won’t be significant for 2-3 years; of all the drivers of Win8 sales, our software analyst Walter Pritchard feels touch is likely the most important, and sees the industry adopting this broadly in 2013, adding risk Cypress may this trend as well. For the moment, Cypress is actually benefitting from Samsung's sales of the " Galaxy S III " smartphone, as observed by Pacific Crest's John Vinh . But Cypress has to worry about other fronts in the touch battle, writes Vinh. Specifically, it appears to be losing business to Atmel ( ATML ): Cypress sees TrueTouch mix in 2012 to be 90% to 95% smartphones versus 5% to 10% eReaders/tablets. We are modeling $197.7 million (-21%) in TrueTouch revenues for 2012, which, at the midpoint, implies $14.8 million in eReader revenues. This is consis- tent with our recently lowered Amazon eReader build forecast of ~5 million units and, in our analysis, confirms that Atmel has won the Kindle Fire refresh.