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Skyworks 3Q Earnings Beat, Revs Fall Shy

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Skyworks Solutions Inc (SWKS - Free Report) reported third quarter fiscal 2013 revenues of $436.1 million, up 12.0% year over year, surpassing management’s guidance of $435.0 million. However, revenues in the reported quarter missed the Zacks Consensus Estimate of $437.0 million.

The company reported net income of $65.7 million or 34 cents per share in the third quarter of fiscal 2013, up from $49.3 million or 26 cents per share in the year-earlier quarter. Excluding non-recurring items, adjusted earnings for the reported quarter were $103.8 million or 54 cents per share compared with $86.1 million or 45 cents in the year-ago quarter.  The year-over-year increase in earnings was driven by the growing portfolio of high-performance analog solutions. The adjusted earnings exceeded the Zacks Consensus Estimate by 10 cents.

Gross profit was $188.2 million compared with $165.3 million in the third quarter of 2012. Gross margin was 43.2% in the reported quarter. The margin performance was driven by the shift in product portfolio toward more differentiated performance-based solutions.

Skyworks continues to capitalize on global mobile connectivity and demand for high-performance analog solutions across a diverse set of vertical markets. Skyworks has also continually gained market share in adjacent vertical markets including automotive, industrial, smart energy, home automation, medical, mobility and cloud computing.

In addition, Skyworks is well-positioned to capitalize on the Internet of Things with high demand for high-performance analog solutions in new markets such as medical, automotive and machine to machine applications.

The company generated $65.0 million in cash flow from operations and ended the quarter with cash and equivalents of $400.3 million. The company repurchased 4.0 million shares in the quarter and authorized a repurchase of up to $250 million worth of the common stock.

Going forward, management expects healthy top- and bottom-line growth in fourth quarter fiscal 2013 with a more diversified margin-accretive product mix. Revenues for the fourth quarter are expected to be approximately $475 million, driven by new program launches and an expanding product line. Skyworks also expects adjusted earnings per share of 62 cents in the fourth quarter of fiscal 2013 with non-GAAP gross margin in the range of 44.0% - 44.5%.

The company believes that its strategy of diversifying its business, expanding into new verticals and continued focus on operational excellence will drive growth in the long term.

Skyworks currently has a Zacks Rank #3 (Hold). Other stocks that look promising and are worth a look in the industry include Marvell Technology Group Ltd. (MRVL - Free Report) , PMC-Sierra Inc. and TriQuint Semiconductor, Inc , each carrying a Zacks Rank #2 (Buy).

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