Skyworks Sputters Down After Earnings Report (SWKS)
What do Samsung, Apple, Amazon, and Huawei all have in common?
That's right, they are all customers of chip maker Skyworks Solutions. SWKS just reported a 5 cent earnings beat on $1.52 non-GAAP basis as per the analysts. Non-GAAP came in at $1.57 per share while GAAP earnings broke a Q3 record hitting $1.32. Investors quickly sold the stock on the beat in a 'buy the rumor sell the news' moment.
Skyworks stock had been creeping up leading to the quarter, yet is still a few dollars away from its highs put forth in 2015, near the $112 range. The stock's PE ratio sits at 20.66x earnings after this quarter. Historically, this is quite a low PE ratio for Skyworks which used to trade as a multiple of its non-GAAP earnings. However with such strong growth and new waves in technology including the multi-year 5G rollout and vehicle communications, the best is yet to come. Skyworks raised its guidance and boosted its dividend given the circumstances.
"Further, we are well positioned to capitalize on the rapidly approaching 5G technology wave – enabling new markets from autonomous vehicles to emerging segments in artificial intelligence, robotics and virtual reality." - Liam Griffin, Skyworks CEO
Revenue was $900.8M for the quarter while analysts were expecting $889M. The company guided towards $980M in revenue versus the $973M expected for the next quarter. Skyworks also predicts its best quarterly results ever for its next release, guiding towards $1.75 non-GAAP earnings.
During the quarter the company supported Huawei's and Samsung's products, Amazon's virtual assistants, and began ramping up production for vehicle-to-vehicle communications. Among other design wins in healthcare, 4K video surveillance, motion sensors, and routers, Skyworks is getting its chips ready for higher margin profits during the 5G wave. Going from 3G to 4G adds significant margin to Skyworks' earnings, even though the world has not fully adopted 4G yet. Skyworks also continues to gain mobile content as its chips are required to support more and more complexity. In the coming months we will soon see what new content the company has prepared for Apple's iPhone, in which Skyworks is a major supplier.