8 May 2015

Skyworks' quarterly revenue rises by more-than-expected 58% year-on-year to $762m

For fiscal second-quarter 2015 (to 3 April), Skyworks Solutions Inc of Woburn, MA, USA (which manufactures analog and mixed-signal semiconductors) has reported revenue of $762.1m, down 5.4% on last quarter's record $805.5m but up 58% on $481m a year ago (and exceeding the original guidance given in January of $750m, up 56% year-on-year).

As a proportion of total revenue, compared with last quarter, integrated mobile systems have fallen back slightly from 48% to 47% as broad markets rose from 21% to 22%, while power amplifiers remain at 31%.

"Once again, integrated mobile systems was our fastest-growing category, up 139% year-over-year, highlighting the ongoing shift towards higher-margin systems solutions, which is taking place across our customer base," notes chief financial officer & executive VP Donald W. Palette. "Our broad market product lines - which serve the connected home, networking, media, automotive, and medical markets - have grown at 27% year-to-date, and that's well ahead of the analog market, helping to mitigate some of the seasonal trends in the mobile business," he adds.

"Skyworks' outperformance underscores the success of our diversification strategy, as positive momentum across our customer base, end markets and product lines helped to mitigate normal March quarter seasonality," says chairman & CEO David J. Aldrich.

Highlights during the quarter are listed as:

• enabling Samsung's Galaxy S6 platform with SkyOne Ultra as well as switching and connectivity products;
• ramping switching and connectivity solutions for Nexus 6 smartphones; 
• capturing more than 20 sockets in a next-generation small-cell LTE base-station;
• introducing 802.11ac front-end solutions for Xiaomi's latest home router platform. 
• launching an integrated Wi-Fi module for leading video monitoring provider Google; 
• securing multiple design wins for the OnStar telematics platform in GM's global fleet; 
• gaining high-reliability analog content in public safety radios for Harris and Sepura;
• expanding the diversity receive portfolio to support multiple device configurations;
• delivering Zigbee front-end modules for Kwikset's intelligent security products;
• powering Sierra Wireless' M2M modules for industrial applications.

"Our business continues to perform at a high level, as we capitalize on a number of powerful global trends driving the proliferation of connectivity in all of its forms," says Aldrich. "By leveraging our architectural and integration leadership, we continue to enhance our competitive differentiation, expanding profitability and creating greater value for our customers and shareholders," he adds. 

"As the market leader in complex analog and RF integration, we are the primary beneficiary of the industry's increasing adoption of systems solutions," says Palette. "This is transforming our business model, as evidenced by our margin expansion, driving strong financial returns."

On a non-GAAP basis, gross margin was 46.7%, level with last quarter and up from 44.7% a year ago (and exceeding guidance of 46-46.5%). "We maintained gross margins on a sequential basis in spite of the seasonal revenue impact, highlighting the strength of our underlying business fundamentals," says Palette.

Operating expenses have risen further, from $94.4m last quarter to $97m, driven by R&D expenses rising from $63m to $58.7m. Operating income was $258.9m (operating margin of 34%), down on $282m (margin of 35%) last quarter but still double the $130.4m (margin of 27.1%) a year ago. Likewise, net income was $224.6m ($1.15 of diluted earnings per share), down from $244.8m ($1.26 per diluted share) last quarter but up from ($0.62 per diluted share) a year ago (and exceeding the guidance of $1.12).

Cash flow generated from operations was $155m, down from last quarter's record $383m but making $538m in fiscal first-half 2015 (up from $373m in fiscal first-half 2014). Capital expenditure remains high at $84m, double the $41.8m a year ago. Despite distributing $73m to shareholders through dividend and stock repurchase activity, Skyworks maintained cash and cash equivalents at just over $1bn (with no debt). Skyworks' board of directors has now declared a cash dividend of $0.13 per share of common stock, payable on 4 June to stockholders of record at the close of business on 14 May.

For fiscal third-quarter 2015, Skyworks expects revenue of $800m (up 5% quarter-to-quarter and 36% year-over-year). Gross margin should rise to 48%, driven by a combination of growing adoption of the firm's custom integrated solutions and precision analog products, increasing global scale, enhanced vertical integration and ongoing operational initiatives. "These factors have created a new baseline for our business model," says Palette. "All of this puts us on a firm path towards our target of at least 50% gross margin." Despite operating expenses rising further to about $99.5m, diluted earnings per share are expected to rise to $1.28. "The stage has been set for a strong 2015, giving us a high level of confidence in our near-term trajectory and accelerating our progress towards $7 in annualized EPS," concludes Palette.

See related items:

Skyworks exceeds quarterly revenue, margin and earnings guidance

Skyworks' quarterly revenue grows 22% to record $718m

Skyworks exceeds raised quarterly earnings and revenue guidance, up 35% year-on-year to $587m

Skyworks' reports above-target 13% year-on-year growth to $481m quarterly revenue

Tags: Skyworks

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