Apple Supplier Skyworks Is Up 5% despite Earnings Miss



Skyworks stock up 5%

Skyworks (SWKS), Apple’s (AAPL) RF (radio-frequency) and mobile communications systems supplier, reported fiscal 2019 first-quarter earnings on February 5. Skyworks stock rose more than 5% in the after-hours trading session even though its earnings and guidance missed analysts’ estimates. The stock rose as the board authorized $2 billion for its stock buyback program, which expires on January 30, 2021. This program replaces last year’s $1 billion stock buyback program, which has about $129 million left in it.

Skyworks lowered its earnings guidance for the first quarter of fiscal 2019 in early January after its key customer, Apple, lowered its revenue estimate for the same quarter due to weak demand for iPhones in China (FXI).

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Skyworks’ fiscal 2019 first-quarter earnings

In the first quarter of fiscal 2019, Skyworks’ revenue fell 4% sequentially and 7.6% YoY to $972 million, missing analysts’ estimate of $1.05 billion but slightly above its revised guidance of $970 million. The revenue miss comes as Apple cut its orders due to a 15% YoY decline in iPhone revenue for the December quarter. The weakness in its mobile business was partially offset by double-digit growth in the broad markets of IoT (Internet-of-Things) and automotive.

Skyworks’ fiscal 2019 first quarter non-GAAP (generally accepted accounting principles) EPS fell 8.5% YoY to $1.83, missing the analysts’ estimate of $1.85 but within the revised guided range of $1.81 to $1.84.

Skyworks’ fiscal 2019 second quarter guidance

The second quarter of the fiscal year is seasonally weak for Skyworks, as smartphone holiday season sales fade. Skyworks joined other semiconductor companies and guided a greater-than-normal seasonal decline in the second quarter of fiscal 2019 due to demand weakness in China. It expects revenue to fall 17% sequentially to $810 million at the midpoint, greater than the normal seasonal decline in the low-teens. The guidance missed analyst estimates of $851.5 million. Its non-GAAP EPS guidance of $1.43 missed the analyst estimate of $1.51.

Skyworks is diversifying beyond mobile to automotive, IoT, connected home, and smart audio to reduce its dependence on Apple. It is eyeing the 5G (fifth generation) opportunity for future growth.

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