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Skyworks Solutions, Inc. (SWKS - Analyst Report) posted a net income of $34.0 million or $0.18 per diluted share compared to a net income of $49.9 million or $0.26 per diluted share in the previous quarter and a net income of $57.1 million or $0.30 per share in the second quarter of fiscal 2012.

Excluding acquisition-related charges but including stock-based compensation expense, Skyworks reported net income of $0.32 per share, in-line with the Zacks Consensus Estimate.

Skyworks reported revenues of $364.7 million in the first quarter, up 12% year over year and surpassed management’s guidance of $360.0 million.

Skyworks continues to weather the turbulent economic conditions well. The company has strategically positioned itself as a diversified company. The global megatrends of mobile computing and ubiquitous connectivity continue to be growth engines for Skyworks.

Skyworks continues to benefit from strong underlying demand in the mobile Internet market driven by market share gains and new product ramps. LTE shipments are expected to grow by leaps and bounds in 2012.  Management expects smartphone adoption will gain further traction in developing countries in 2012.

In particular, smartphone growth in India and China is expected to double in 2012. Another strong area of growth is tablets, which continues to replace PCs.


Gross margin came in at 43.9%, down from 44.3% in the previous quarter but up from 43.2% in the year-ago quarter. Operating margin came in at 26.1% versus 26.7% in the previous quarter and 23.0% in the year-ago quarter.

Skyworks generated $117 million in cash flow from operations and invested $26 million in capital expenditures. The company does not have any debt on its balance sheet as of now.

The company ended the quarter with cash and equivalents of $307.4 million, down from $446.5 million at the end of the previous quarter. 


Going forward, management expects revenues of approximately $383 million in the second quarter of fiscal 2012. Skyworks expects sequential growth in both top-line and bottom-line driven by LTE and smartphone program ramps coupled with increasing traction in adjacent  high performance analog applications. 

Gross margin is projected at around 43.5%. Management expects gross margins as sequential revenue growth resumes and the company realizes synergies associated with the AATI acquisition. Skyworks expects EPS of $0.44 in the second quarter.

We continue to maintain a Neutral recommendation on Skyworks. Nevertheless, we have a Zacks #1 Rank on Skyworks, which translates into a short-term rating of Buy.

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