3 May 2016

Skyworks' quarterly revenue up slightly year-on-year

For fiscal second-quarter 2016 (to 1 April), Skyworks Solutions Inc of Woburn, MA, USA (which manufactures analog and mixed-signal semiconductors) has reported revenue of $775.1m, down 16% on $926.8m last quarter but up 1.7% on $762.1m a year ago.

As a proportion of total revenue, power amplifiers (PAs) comprised 17%, integrated mobile systems (IMS) 58%, and broad markets 25%. "We saw healthy growth in both integrated mobile systems and broad markets," says chief financial officer & executive VP Donald W. Palette. "Our broad markets portfolio grew over 18% year-over-year." 

On a non-GAAP basis, gross margin was 50.8%, down from 51.4% last quarter but up on 46.7% a year ago. Operating expenses were less than the expected $109.5m, falling back to $108.6m ($73.1m on R&D and $35.5m on SG&A).

"Our gross margin initiatives and operating expense discipline enabled us to both expand margins and earnings in a seasonally down quarter," notes chairman & CEO David J. Aldrich.

Operating income was $285m (operating margin of 36.8%), down from $366.6m (margin of 39.6%) last quarter but up on $258.9m (operating margin of 34%) a year ago. Likewise, net income was $242.3m ($1.25 per diluted share, $0.01 better than guidance), down on $311.2m ($1.60 per diluted share) last quarter but up on $224.6m ($1.15 per diluted share) a year ago.

Cash flow generated from operations was $154.5m. Skyworks invested $37m in capital expenditure (cut from $79.5m last quarter), with depreciation of $53.6m. The firm also repurchased 2 million shares of its common stock at an average price of just over $67.50 a share. During the quarter, cash and cash equivalents hence fell from $1233m to $1177m (while Skyworks has no debt). "Given our confidence in our long-term business trends, we expect to continue to be very active with our share repurchase activity at current levels," says Palette.

Also, Skyworks' board of directors has declared a cash dividend of $0.26 per share of common stock, payable on 2 June to stockholders of record at the close of business on 12 May.

"Driven by our increasing diversification and differentiated product portfolio, we delivered another solid financial performance for the second fiscal quarter of 2016, posting year-over-year growth in revenue, profitability and earnings, even as we navigated through a combination of inventory adjustments and forecast reductions at one of our major customers," summarizes Aldrich.

Business highlights cited during fiscal second-quarter 2016 include the following:

• delivering the world's first front-end solution optimized for LTE Cat-M (machine-to-machine) applications;
• partnering with leading infrastructure provider to deliver the first commercial Gigabit LTE system;
• unveiling SkyBlue (technology that enhances RF power capability and efficiency in front-end solutions);
• powering Huawei's P9 flagship LTE platform with 10 solutions;
• expanding the list of OEMs leveraging SkyOne integrated platform;
• increasing blended content by 20% across Samsung's Galaxy S7 smartphones;
• supporting next-generation launches at Lenovo, OPPO, Vivo, Xiaomi and ZTE;
• powering Cisco's large enterprise access point system with 16 analog solutions;
• enabling Iotera's GPS industrial tracking devices; and
• leveraging connectivity modules to power Arris and Liberty Global set-top boxes. 

"Looking ahead, we are well positioned to continue capitalizing on the powerful connectivity and Internet of Things trends as we deliver higher-value solutions with superior performance and functionality across new markets, applications and customers," says Aldrich. 

"We continue to expect IMS to remain our strongest growth segment, followed by broad markets, while power amplifier products continue to decline as a percentage of our revenue as the market shifts towards higher-value integrated solutions," says Palette.

"During the June quarter we expect to be impacted by an inventory adjustment at a large customer, partially offset with gains across broad markets and crisp operational execution," says Palette.

Hence, for its fiscal third-quarter 2016, Skyworks expects revenue to fall to $750m (down on $810m a year previously), with softness at the firm's largest customer being partially offset by strong year-on-year growth at Samsung, in China, and across the broad markets. Nevertheless, gross margin should rise to 51%. "Our strong gross margin outlook in the face of current market conditions highlights the benefits of our higher-value integrated systems, along with our scale and flexible manufacturing operations," notes Palette. Operating expenses should be roughly level at $108.5m. Diluted earnings per share should fall to $1.21.  

"Looking ahead, we see opportunity for additional margin improvement, as we continue to ramp our custom solutions and leverage our recent capital investments," says Palette. "We recommend modeling a 60% incremental gross margin off of the third-quarter baseline," he adds. "We continue to target a goal of at least 53% gross margin for the company, and have a number of initiatives in place to accelerate our progress towards achieving this goal."

See related items:

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Skyworks exceeds quarterly revenue and EPS guidance  

Skyworks' quarterly revenue rises a more-than-expected 38% year-on-year to $810m

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

Skyworks exceeds quarterly revenue, margin and earnings guidance

Tags: Skyworks

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