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Skyworks Guides Higher for Q3

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Leading semiconductor manufacturer Skyworks Solutions Inc. (SWKS - Free Report) recently updated its guidance for third-quarter fiscal 2014 to better reflect the healthy market conditions and higher revenue and earnings expectations. The improved scenario is buoyed by the growing opportunity within the Internet of Things and higher demand for increased connectivity standards, both of which have enabled the company to outpace the broader semiconductor market.

Skyworks currently expects third-quarter fiscal revenues to increase 31% year over year and 19% sequentially to $570 million. Previously, the company expected revenues to be approximately $535 million, up 23% year over year. Skyworks also expects adjusted earnings per share to increase 48% year over year to 80 cents, up from 73 cents expected earlier.

The company believes that its strategy of diversifying its business and expanding into new verticals will drive growth in the long term. Product innovation and proprietary solutions have positioned the company well for sustainable above-market growth in the near term. Skyworks also anticipates leveraging its joint venture with global electronics products leader Panasonic Corporation (PCRFY - Free Report) for developing high-performance filter solutions. The strategic partnership is expected to yield at least 100 basis points of gross margin accretion in fiscal 2015.

In order to fuel its growth engine, Skyworks aims to capitalize on three business segments − mobile Internet, vertical markets and analog components. Demand for mobile Internet applications is catapulting with the broad proliferation of smartphones, net books, note books, caplets and other forms of embedded wireless devices. Skyworks also continues to consolidate its share across the mobile Internet spectrum. This covers everything from net books and data cards to smartphones, and even entry-level handsets.

The market is estimated to have 50 billion connections by 2020. Some of the fastest-growing segments include medical, industrial, automotive and smart energy where connectivity is being adopted for the very first time. Superior quality, environmentally friendly products and sustainable business practices are key differentiators for this company in a very competitive environment. Consequently, we remain bullish on Skyworks’ revised guidance.

Skyworks currently has a Zacks Rank #1 (Strong Buy). Other stocks that look promising and are worth a look now include Marvell Technology Group Ltd. (MRVL - Free Report) and TriQuint Semiconductor, Inc. , both carrying a Zacks Rank #2 (Buy).

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