20 January 2012

Skyworks’ 17% year-on-year revenue growth beats guidance

For its fiscal first-quarter 2012 (to end-December 2011), Skyworks Solutions Inc of Woburn, MA, USA (which manufactures linear products, power amplifiers, front-end modules and radio solutions for handset and infrastructure equipment) has reported revenue of $393.7m, down 2% on last quarter’s record $402.3m but up 17% on $335.1m a year ago (and exceeding guidance of $390m). The 10%-customers were Foxconn, Samsung and Nokia. Of total revenue, 70% was for handsets and 30% for high-performance analog (HPA) products.

During the quarter, Skyworks ramped GPS low-noise amplifiers across leading smart-phone OEMs; started volume production of advanced antenna switch modules (ASMs) for China’s Huawei Technologies; was awarded TDD-LTE base-station switch design wins at Ericsson; supported leading tablets, gaming consoles and LED TVs with connectivity solutions; captured wireless networking sockets within General Electric’s smart appliances (including washers, dryers, refrigerators, dishwashers and ovens); and secured designs within Medtronic’s next-generation heart monitor/pacemaker and 2-way radio applications. The firm also received the 2011 Global Partnership award from Chinese telecom equipment firm ZTE.

On a non-GAAP basis, gross margin has fallen from 44.7% last quarter to 44.3%. Operating expenses have been cut back slightly from $70.3m to $69.3m. Net income was $96.2m, down from $103.8m last quarter but up from $84.7m a year ago.

Cash flow from operations was $77m (well below last quarter’s record $122.8m). Capital expenditure has been reduced again, from $33m a year ago and $15.3m last quarter to just $6.4m (compared with depreciation of $17.3m). Free cash flow was hence $70.8m (down from last quarter’s $108m, but well above $41m a year ago).

During the quarter, Skyworks repurchased 750,000 shares of its common stock and $9m of its convertible debt. Overall, cash and cash equivalents rose from $410.8m to $446.5m (almost back to the $450m of a year ago).

“Skyworks’ solid performance against the current economic backdrop is being driven by our expanding positions in adjacent analog semiconductor markets, global demand for mobile internet applications and strong operational execution,” says president & CEO David J. Aldrich. “More specifically, we are capitalizing on new opportunities in medical, automotive, smart energy and home automation markets while capturing additional content and share within LTE smart-phones, e-readers, tablets and LED TVs... while the economic climate has created challenges in some of our segments, we saw a healthy holiday season demand across all categories of mobile Internet devices,” he adds. “As a result, Skyworks’ ongoing diversification and scale are positioning us to deliver above-market growth and, ultimately, create greater competitive advantages.”

After the close of the quarter (on 10 January), Skyworks completed its acquisition of Advanced Analogic Technologies Inc (AATI) of Santa Clara, CA for about $200m in net cash. AnalogicTech is an analog semiconductor firm focused on energy-efficient devices for the application-specific power management needs of feature-rich consumer electronic devices (such as mobile handsets, digital cameras, tablets, notebooks, TV and LCD displays) as well as devices for computing, industrial, medical and communications applications. “We elected to pursue an all-cash structure of this transaction in order to avoid issuing equity,” says VP & chief financial officer Donald W. Palette. Skyworks also retired its remaining $17m of outstanding debt.

“Based on our diverse customer and market base as well as share gains, we are planning to outperform our addressable markets in the seasonally low March quarter,” says Palette. Specifically, for fiscal second-quarter 2012 Skyworks expects revenue of $360m, including $14m from a partial-quarter contribution from AATI (for which the full December-quarter revenue was $15.7m). “While we are forecasting AATI to be neutral to second fiscal quarter earnings, we expect the acquisition to be accretive for fiscal year 2012,” says Palette.

Due to the seasonally lower revenue base, gross margin should fall to 43-43.5%. However, this should improve in fiscal Q3 (to end-June) as sequential revenue growth resumes and as Skyworks realizes synergies associated with the AATI acquisition. Including AATI, operating expenses should rise to $74-75m. “CapEx should remain below depreciation levels until fiscal second-half 2012 as we increase volumes,” notes Palette.

See related items:

Skyworks grows quarterly revenue more-than-expected 13% to $402.3m

Skyworks quarterly revenue up 27% year-on-year to $356.1m, beating guidance

Skyworks’ revenue exceeds guidance, up 37% year-on-year

Skyworks grows revenue 7% to record $335.1m

Tags: Skyworks

Visit: www.skyworksinc.com