Skyworks Stock Drops After Earnings Beat. Does It Have an Apple Problem? -- Barrons.com

Dow Jones11-14

Karishma Vanjani

Skyworks Solutions stock fell to its lowest value in two years after the chip maker published a weak forecast for profit and revenue, citing poor demand in auto and industrial segments. But Apple, at least, doesn't appear to be a problem.

For the latest fourth fiscal quarter, Skyworks reported an adjusted profit of $1.55 a share and $1.025 billion in revenue, exceeding expectations of $1.52 in earnings per share on $1.021 billion in revenue.

But Skyworks stock fell as forward-looking markets focused on the projections, which fell short of analyst forecasts. Skyworks, for the first fiscal quarter ending in December, projected revenue between $1.05 billion and $1.08 billion or $1.065 billion at the midpoint. Adjusted earnings per share were forecast at $1.57 at the midpoint of the revenue range.

However, both metrics fall short of the consensus estimates from analysts on FactSet, who had projected $1.71 per share and $1.087 billion in sales before Tuesday.

The hit to projection came from weak global demand, which "remains muted in automotive and industrial markets, as Tier 1s and OEMs [original equipment manufacturers] work down excess inventory," CEO Liam Griffin said in a call discussing earnings.

Skyworks stock has fallen 4.1% to $83.49, a level that would be the lowest close since November 2022, the Dow Jones Market data team says.

Investors pay close attention to Skyworks due to its relationship with Apple, its largest customer. Despite the weak forecast, Skyworks said it expects its mobile business' revenue to be up mid-single digits sequentially in the first fiscal quarter, driven by seasonal product ramps.

Apple also made approximately 69% of its total revenue in the latest fourth fiscal quarter, up 21% sequentially, the company said. Skyworks produces analog and mixed-signal chips for Apple; it also serves Android smartphones, including Google, Samsung, and Oppo, but it's a smaller portion of the business.

"Handset business continues to perform as expected as the company continues to see a shift in revenues towards its largest customer and away from Chinese clients," Piper Sandler's Harsh Kumar wrote in a note. Kumar still rates the stock at Hold given the near-term challenges in the business model.

Write to Karishma Vanjani at karishma.vanjani@dowjones.com.

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

 

(END) Dow Jones Newswires

November 13, 2024 11:49 ET (16:49 GMT)

Copyright (c) 2024 Dow Jones & Company, Inc.

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Comments

We need your insight to fill this gap
Leave a comment