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23 July 2009


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

For its fiscal third-quarter 2009 (to end June), 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 $191.2m (75-80% from handsets and 20-25% from linear products). Though still down 11% on £215.2m a year ago, this is up 11% on last quarter’s $173m, and exceeds guidance of 5% growth to $182m. Samsung, Sony Ericsson, Motorola and LG were all 10% customers, while Nokia was in the high single digits.

After on 22 January announcing a restructuring plan (costing $19.4m) to cut staffing by 4% (150 employees), operating expenses have been reduced from $68.6m in fiscal Q2 to just $48.9m. Operating income was $21.5m, almost back to $22.8m a year ago and a big improvement on an operating loss of $3.7m last quarter. On a non-GAAP basis, operating margin was 14.9%, up on 14.1% a year ago. Gross margin was 40.5% (up slightly on last quarter’s 40% and almost level with 40.6% a year ago), driven by improved fab equipment efficiencies, progress on yield improvement initiatives, and ongoing material cost reductions.

Net income was $19.8m, a big improvement on last quarter’s loss of $4.6m and almost level with net income of $20.5m a year ago. Cash flow generated from operations was $44m (compared to $26.2m a year ago). During the quarter, cash and equivalents rose by $40m to $308m, even after $11m of depreciation, $6m in capital expenditure, and June’s cash acquisition of Axiom Microdevices Inc of Irvine, CA (the only volume supplier of CMOS silicon-based power amplifiers for mobile handsets).

Despite the economic downturn, Skyworks exceeded all key financial and operating targets, driven by program strength spanning analog, smart-phone, netbook, 3G infrastructure, mobile video and energy management applications, comments president & CEO David J. Aldrich. During the quarter, Skyworks: introduced several high-linearity ultra-low-noise amplifiers to address demanding receiver applications, including the GPS, satellite radio, and WCDMA and LTE infrastructure markets as well as ISM hubs repeaters and access points; secured the firm’s first wireless local-area networking (WLAN) design wins at Intel (for their 802.11b/g/n chipsets); ramped front-end solutions supporting Broadcom’s 802.11n WLAN reference designs (capturing three of the world’s top four netbook and notebook OEMs); powered Samsung’s latest smart-phones and touch-screen platforms with EDGE and WCDMA front-end solutions; and ramped production for ESCO Technologies and Neptune (joining existing customers Itron, Badger Meter, Landis & Gyr and Sensus, some of the first movers in deploying new and retrofitted smart water, gas and electric meters).

“Although we remain cautious on the macro-economy, our expanding product, market and customer footprints are setting the stage for a much stronger back half of 2009,” says VP & chief financial officer Donald W. Palette. “Specifically, we expect revenue for the September quarter [fiscal Q4] to be up 10% sequentially [to $210m] with a 17% operating margin [based on operating expenses of $50m],” he adds. Skyworks expects gross margin to grow to 40.5-41%. “We also anticipate another strong quarter of cash flow generation,” says Palette.

The 17% operating margin puts Skyworks on track to achieve its target model earlier than expected, comments Aldrich. The firm previously targeted 18-20% at $250m in quarterly revenue, but the business model now has the leverage to achieve 20% at $240m in quarterly revenue. “Our strategy of diversifying into a broader set of analog semiconductor sectors, consolidating share in core markets and leveraging our scale advantages is increasingly reflected in our improving financial performance,” he adds. “We have never been better positioned to outperform our addressable markets to achieve our long-term financial targets... Given our product pipeline and the success of our fab-lite strategy and our leaner cost structure today, we now see a path to 20% operating margins at revenue levels significantly less than the $250m quarterly model.”

See related items:

Skyworks surpasses RFMD in power amplifier market share

Skyworks’ revenue shrinks 18%, but beats guidance

Skyworks generates $75m in cash flow despite 10% sales drop

Skyworks lowers quarterly revenue guidance from $240m to $210-215m

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