6 November 2010


Skyworks’ revenue exceeds revised guidance; up 14% to record $313.3m

For its fiscal 2010 (to 1 October), 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 $1.072bn, up 34% on fiscal 2009's $802.6m.











For the fiscal fourth-quarter, revenue was a record $313.3m (80% from handsets and 20% from linear products). This is up 14% on $275.4m the prior quarter and up 37% on $228.1m a year ago (and exceeding guidance of $310m, which had been updated on 21 September from the original guidance in July of $300m).

“Our strong fourth quarter results were driven by our mobile internet and our diversified analog growth edges,” says president & CEO David J. Aldrich. “Skyworks is capitalizing on consumers’ insatiable demand for always-on connectivity, broadband mobility and access, as well as home automation applications,” he adds.

On a non-GAAP basis, gross margin has risen from 40.9% a year ago and 43.3% last quarter to 43.8%, driven by a product mix that increasingly includes higher-margin vertical market in 3G solutions, volume ramp of new products, margin-enhancing demand-driven capital investments, continued manufacturing productivity enhancements, and yield improvements.

Operating income has risen from $42.5m a year ago (an operating margin of 18.6% of revenue) and $63.5m last quarter (a margin of 23.1%) to $81.8m (26.1%), despite operating expenses rising from $55.6m last quarter to $70.7m. For full-year fiscal 2010, operating income was $246.3m (a margin of 23%), more than doubling from $120.9m (15.1%) in fiscal 2009.

Non-GAAP net income has risen from $41.8m a year ago and $58.7m last quarter to $78.8m. During the quarter, cash and cash equivalents rose by $69m, from $390m to $459m, despite $12m of depreciation and $29m in capital expenditure.

“We believe our strategy of diversifying across new vertical markets and customers while continuously improving operational execution will translate into sustainable above-market growth, greater operating leverage and increasing shareholder value,” says Aldrich.

Skyworks says that, during the quarter, it ramped shipments of ZigBee-enabled solutions targeting hospitality and security applications; gained traction at Huawei and ZTE with its portfolio of high-performance broadband synthesizers spanning ultra-wide frequency ranges; secured reference design wins with Broadcom addressing HDTV, Blu-ray player, notebook, gaming console and smartphone platforms; shipped more than 4 million wireless connectivity solutions in support of the rapidly emerging tablet market; was designed into next-generation cable head-end distribution systems at Motorola; started volume production of analog components at Cisco for fiber-to-the-curb (FTTC), fiber-to-the-home (FTTH), cable set-top box and wireless video systems; and extended its smart energy presence by capturing design wins enabling LED-based streetlight monitors and controllers.

“Having completed the 6-inch capacity expansion in our Newbury Park fab last year, we have strategically focused our more recent CapEx investments on expanding our assembly & test capabilities in support of our improving outlook and high visibility,” says VP & chief financial officer Donald W. Palette. “These back-end investments come from our 6-inch wafer transition and hybrid outsourcing model and are focused on equipment adds to eliminate internal bottlenecks,” he adds. “We anticipate these investments to payback within the fiscal year, while expanding margins and improving our return on invested capital.”

Given strong order visibility and increasing customer demand, and based on specific program ramps, for fiscal first-quarter 2011 Skyworks expects revenue of $330–335m (up 6% sequentially and 35–37% year-on-year). “Operationally, we expect to deliver continued gross margin expansion [to 44.5%] and operating leverage yielding a 27–28% non-GAAP operating margin [up sequentially from 26.1%, and on track for the existing medium-term operating model target],” says Palette. Skyworks also expects to pay off its $50m credit facility.

“We are entering fiscal 2011 poised to demonstrably outpace industry growth, underpinned by our design-win momentum, by a product pipeline, and by scale advantages,” believes Aldrich. “Skyworks is making strides towards a new mid-term operating model targeted at 30% [with a minimum gross margin of 45%].”

See related items:

Skyworks grows revenue 44% year-on-year to $275.4m

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

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

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