5 May 2010


Skyworks' March quarter beats guidance with 38% year-on-year growth

For its fiscal second-quarter 2010 (ended 2 April), Skyworks Solutions Inc has reported revenue in the seasonally low March quarter of $238.1m, down 3% on last quarter's $245.1m but up 38% on $173m a year ago (and exceeding its guidance of $230–235m, which itself had been revised upwards on 1 March from 20 January's original guidance of $225m). Growth benefited from Skyworks' broad diversification, shipping to nearly 1000 customers, of which only one (Samsung) exceeded 10% of total revenue.

Driven by a product mix that increasingly includes higher margin, vertical market and 3G solutions, a volume ramp of new products, continued manufacturing productivity enhancements, product end-to-end yield improvements, and significant material cost reductions, non-GAAP gross margin has risen from 40% a year ago and 42.2% last quarter to 42.3%.

Operating expenses have been cut from $68.6m a year ago and $60m last quarter to $52m. Despite this, operating income has fallen from $52.3m (21.3% operating margin) last quarter to $48.7m (20.5% margin), although this is still more than double the $21.2m (12.3% margin) a year ago.

Cash flow from operations was $60m. So, e ven after a $40m outlay for retiring March 2010 convertible debt and $11m of depreciation, cash and cash equivalents still rose during the quarter from $402m to $411.5m.

"Skyworks is capitalizing on the rapidly expanding opportunity for analog semiconductor solutions, which are increasingly at the heart of smart phone, broadband access, network infrastructure and smart grid applications," says president & CEO David J. Aldrich. "At the same time, we are gaining traction in new vertical markets and making substantial progress towards our long-term financial targets," he adds.

During the quarter, Skyworks:

  • received initial orders from Honeywell for wireless home security systems;
  • secured first design wins with LG's Consumer Appliance Group with ZigBee front-end modules;
  • developed customized set-top box solutions for Thomson in support of DirectTV;
  • introduced highly integrated multimode front-end solutions for next-generation smart phones and embedded wireless devices;
  • ramped integrated radio subsystems for TD-SCDMA and WCDMA base stations at China's Huawei; and
  • started shipments of 3G power amplifiers enabling high-volume data-card applications at ZTE.

"We believe the unique combination of our innovative product roadmaps, design-win pipeline and scale advantages are setting the stage for an even stronger second half of fiscal 2010 and a widening of the gap between overall market growth and our performance," says Aldrich.

" Growth across our set of diversified markets and customers, coupled with new program ramps, is translating into improving order visibility," notes VP & chief financial officer Donald W. Palette. Hence, for fiscal third-quarter 2010, Skyworks expects 10–15% sequential revenue growth. "Operationally, we plan to drive further improvements in both gross and operating margins," he adds. Assuming revenue of $268m (at the midpoint of the forecast range), gross margin should be 43% and (even with operating increased expenses of $54–55m) operating margin should rise to nearly 23%.

"This trajectory is consistent with our medium-term financial targets outlined previously, namely operating margins in the mid-20s on revenues in the $280–300m range," says Palette. "This model was highly achievable in the near term and strikes the right balance between gaining market share, enhancing margins and, most importantly, maximizing our return on invested capital," he continues. "Given the strengthen of our business model, we expect additional leverage well beyond the mid-20% range as we continue to scale and further diversify Skyworks," concludes Palette.

"By simply annualizing our June-quarter outlook, we are on a greater than $1bn revenue run-rate with earnings of $1.20 per share — even before our second-half 2010 ramp," comments Aldrich. "These milestones represent yet another step in the transformation of Skyworks into a high-margin, diversified analog semiconductor market leader."

See related items:

Skyworks raises March-quarter revenue guidance from $225m to $230–235m

Skyworks reports revenue up 17% year-on-year to record $245m

Skyworks’ recovery strengthens, boosted by diversification, market-share gains and content growth

Skyworks’ revenue rebounds by 11% from March-quarter dip

Skyworks surpasses RFMD in power amplifier market share

Skyworks’ revenue shrinks 18%, but beats guidance

Search: Skyworks