Skyworks Stock Drop
Skyworks Reports Solid Q3 Earnings But Weak Q4 Outlook Sends Shares Down 8.7%
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Skyworks' shares tumbled about 8.7% in after-hours trading after the company issued weaker-than-expected guidance for the current quarter.
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Phil Brace, Skyworks' CEO and president, said: 'We delivered a solid quarter with revenue and earnings above expectations, reflecting consistent execution across the portfolio.'
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Over the last five years, Skyworks' demand has weakened, with revenue down about 3.3% per year; over the last two years, annualized declines ran about 4.2%.
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For Q4, management projected mobile revenue to grow sequentially in the high-teens, with Broad Markets up about 5% year over year and accounting for roughly 39% of sales.
Skyworks Solutions posted adjusted earnings of $1.08 per share on revenue of $934.8 million in its fiscal third quarter, a 3.1% drop from a year earlier, according to Quartr. But the real hit came after the bell: shares fell about 8.7% in after-hours trading as investors focused on the company's weaker-than-expected Q4 guidance.
CEO Phil Brace tried to frame the results positively. "We delivered a solid quarter with revenue and earnings above expectations, reflecting consistent execution across the portfolio," he said. Still, the guidance spooked traders. Skyworks projects Q4 adjusted EPS of $1.27 — just below the $1.28 analyst estimate — on revenue of $1.01 to $1.06 billion, per Benzinga.
Q3 Numbers Beat But Revenue Keeps Falling
Skyworks' $934.8 million in Q3 revenue beat Wall Street's estimates, but the year-over-year decline tells a harder story. GAAP earnings came in at just $0.22 per share on a bottom line of $33.9 million, according to Quartr. The gap between the $0.22 GAAP figure and the $1.08 adjusted figure reflects significant one-time costs being stripped out.
The revenue decline is not new. Over the last five years, Skyworks' revenue has dropped about 3.3% per year. Over the last two years, that pace quickened to roughly 4.2% annually, according to Financial Content. Analysts point to cyclical semiconductor trends and long-term pressure on demand as key drivers.
Q4 Guidance Anchored Around $1.04 Billion Midpoint
For Q4, Skyworks guided revenue between $1.01 billion and $1.06 billion. The midpoint of $1.035 billion is close to the consensus estimate of $1.021 billion, per Benzinga. Adjusted EPS guidance of $1.27 came in one cent below what analysts expected, a small miss that still rattled investors.
Management offered some detail on the mix. Mobile revenue is expected to grow sequentially in the high-teens percentage range. Broad Markets — which covers non-smartphone products — is projected to grow about 5% year over year and make up roughly 39% of total sales, according to Yahoo Finance.
Qorvo Deal Adds Costs, Stock Buyback Offers Offset
Skyworks is in the process of acquiring rival chipmaker Qorvo. That deal is already adding costs. Management said it absorbed about $0.03 per share in incremental financing charges tied to the pending transaction, according to Quartr. Those costs weighed on the annual earnings trajectory even as the company beat on the headline quarter.
To offset shareholder dilution concerns, Skyworks announced a $2 billion stock repurchase program as part of its capital allocation plan. Share buybacks reduce the number of shares outstanding, which can lift earnings per share over time. Whether that is enough to restore confidence depends on whether revenue trends stabilize.
Long Decline Casts Shadow Over Short-Term Beats
Skyworks has now beaten quarterly estimates more than once while still posting year-over-year revenue declines. That pattern reflects a broader challenge in the semiconductor industry: beating a low bar does not mean growth is back. Yahoo Finance noted that analysts flagged multi-year revenue pressure despite the quarterly outperformance.
The 8.7% after-hours drop suggests investors are focused on the trend, not the beat. Revenue has now declined for multiple consecutive years. Until Skyworks can show a clear path back to growth — potentially through the Qorvo deal or a smartphone upgrade cycle — the stock may keep facing headwinds, according to Financial Content.
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