Skyworks Solutions Inc. shares plunged more than 11% Wednesday, falling sharply despite posting fiscal second-quarter results that beat Wall Street forecasts and contrasted with a major rally in the broader semiconductor sector. The drop to $64.46 underscores deep investor skepticism about the company's heavy reliance on a smartphone market that analysts view as mature and offering little growth.
"Investors are still reluctant to pay up for a company whose earnings base remains heavily tied to the mature smartphone market," Benchmark analyst Cody Acree said. Acree remains sidelined on the stock, waiting for the company to "provide clearer evidence that it can return to sustainable predictable growth."
For its fiscal second quarter, Skyworks reported revenue of $943.7 million and adjusted earnings of $1.15 per share, beating consensus estimates of $902.2 million and $1.04, respectively. However, the company’s mobile business, which accounts for 58% of its total revenue, fell 7% from the prior year and 15% from the previous quarter. The company guided for third-quarter revenue of $925 million at the midpoint, ahead of the $861.7 million analysts had projected.
The selloff highlights a critical challenge for the maker of wireless chips for customers like Apple Inc. and Samsung. While the PHLX Semiconductor Index has been on a historic rally, Skyworks is being penalized for its core market's stagnation. Rising inventory, with days inventory outstanding jumping to 144 from 115 in the previous quarter, further points to potential demand weakness. Oppenheimer analyst Rick Schafer dubbed the company's effort to diversify into areas like automotive and data centers a "'prove it' initiative," a sentiment echoed by UBS analyst Timothy Arcuri who cited "consumption headwinds."
This article is for informational purposes only and does not constitute investment advice.
