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Skyworks tumbles as sluggish smartphone market weighs on forecast
Skyworks Solutions shares fell more than 14 per cent in extended trading after the chipmaker forecast first-quarter revenue and earnings below analysts’ expectations. The outlook points to continued pressure in its core smartphone business, particularly in the premium Android market.
The company expects revenue of US$1.80 billion to US$1.90 billion and adjusted earnings per share of US$1.25, compared with analyst estimates of about US$1.99 billion and US$1.52. Smartphone revenue is expected to decline by a low-teens percentage sequentially. Fourth-quarter revenue was US$1.05 billion, slightly above estimates, and Skyworks said its completed Qorvo acquisition is expected to bring at least US$500 million in annual cost savings.
In short
- Skyworks shares dropped over 14 per cent after its forecast missed estimates.
- Smartphone weakness is expected to weigh on first-quarter revenue and earnings.
- The Qorvo deal is expected to deliver at least US$500 million in annual savings.
Explained simply
Skyworks Solutions makes semiconductor components that help smartphones connect to mobile networks. It sells to phone manufacturers, including makers of premium Android devices, so demand for those phones can affect its sales.
The smartphone market has been a major source of business for Skyworks, but the company also serves other industries. Its planned combination with rival chipmaker Qorvo would bring two suppliers’ operations together, with the companies expecting savings from lower costs. Changes in Skyworks’ sales outlook matter to investors because they can signal how phone demand and the merger may affect its future earnings.