Skyworks, Qorvo, and Avago Fall after Qualcomm JV Announcement



Qorvo falls 9.8% on January 13, 2016

The shares of peer companies in the RF (radio frequency) sector fell on January 13, 2016. RF supplier Qorvo (QRVO) fell 9.8% that day to $40.39. Stocks fell after Qualcomm (QCOM) and Japan’s (EWJ) TDK (TDK) announced their joint venture (or JV). The JV will help deliver RFFE (radio frequency front-end) modules into integrated systems for mobile devices and other segments, including Internet of Things (IoT), robotics, and aerospace. The JV deal poses a threat to the companies in this sector where revenues can be negatively impacted.

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Skyworks and Avago also fell

Shares of Skyworks Solutions (SWKS) fell 4.5% to $62.16 on January 13, 2016. As stated earlier, investors believe that the JV will pose a substantial threat from a stronger Qualcomm. Skyworks shares have fallen by more than 17% in 2016 over concerns on lower iPhone (AAPL) sales. Shares of semiconductor giant Avago Technologies (AVGO) fell 5% to $123.31 on January 13.

According to Northland Securities analyst Tom Sepenzis, the JV shouldn’t significantly hurt other companies in this space. Sepenzis expects Qorvo and Skyworks (SWKS) to remain market leaders in this business segment. Sepenzis also noted that Qualcomm’s RF360 has been in the market without gaining any traction. Penetration into this market hasn’t been easy for Qualcomm.

Qorvo, Skyworks, and Avago are trading at a discount of 37%, 61%, and 38%, respectively, to median analyst estimates.


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