Thursday, January 21, 2010

Skyworks Solutions (SWKS) Beats Estimates, Raises Guidance - But Still Sold Off

Skyworks Solutions (SWKS) looks like it has done everything right... beat analysts expectations, increased future guidance; but the stock is still being sold off in premarket (as it had been last night in after hours).  It just appears to be an environment where - short of the few names that absolutely are obliterating estmates - "sell the news" is the reaction.  The stock appears to be trading under $14.30 in premarket which would cause some issues in the chart, but let us see if the stock can recapture $14.60 or so today, placing it back over the 20 day moving average. 

(EDIT 9:35 AM - Skyworks is now back to "flat" versus yesterday's close @ about $14.70 so I'll get back the position we sold Tuesday as the stock would have regained the 20 day moving average)

Recall, we sold 55% of our stake at $15.00 Tuesday, ahead of earnings in our typical conservative move to not have hefty exposure to a stock going into "knee jerk reaction" time.  If the selloff simply took the stock down to a level it still held all its moving averages it would be a pleasant experience to be able to buy back what we sold for a quick discount... but now we have to monitor how it acts a bit more closely. 

Fundamentally, I did not see much not to like - the company is benefiting for the exact reason we own it (and have owned some of its peers); internet mobile.  The companies in this sector are also backdoor plays on the "smart grid"...

“Skyworks’ strong performance is being driven by several key trends including the exploding demand for mobile Internet applications, increasingly diversified linear products and the rapid adoption of smart grid technologies,” said David J. Aldrich, president and chief executive officer of Skyworks.

Full report here.
Conference call transcript here.

Summary of results via AP
  • Chip maker Skyworks Solutions Inc. said Wednesday its fiscal first-quarter profit and sales rose, boosted in part by the "exploding" demand for mobile Internet applications.  For the three months ended Jan. 1, the company earned $28 million, or 16 cents per share, up 19 percent from $23.6 million, or 14 cents per share, in the same period a year earlier. Excluding tax adjustments, share-based compensation expense and other special items, the company earned 27 cents per share in the latest quarter.
  • Revenue rose 17 percent to $245.1 million from $210.2 million.
  • Analysts, on average, expected profit of 25 cents per share on sales of $240.9 million, according to a poll by Thomson Reuters. Analysts typically exclude one-time items from their estimates.
Margins looked fine:
  • Increased non-GAAP gross and operating margins to 42.2 percent and 21.3 percent, respectively (41.8 percent and 17.4 percent on a GAAP basis)
  • For the fiscal second quarter, Skyworks expects adjusted earnings of 21 cents per share on sales of about $225 million.  Analysts expect profit of 19 cents per share on sales of $214.6 million.

Skyworks Solutions, Inc. is an innovator of high reliability analog and mixed signal semiconductors. Leveraging core technologies, Skyworks offers diverse standard and custom linear products supporting automotive, broadband, cellular infrastructure, energy management, industrial, medical, military and mobile handset applications. The Company’s portfolio includes amplifiers, attenuators, detectors, diodes, directional couplers, front-end modules, hybrids, infrastructure RF subsystems, mixers/demodulators, phase shifters, PLLs/synthesizers/VCOs, power dividers/combiners, receivers, switches and technical ceramics.

Long Skyworks Solutions in fund; no personal position

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