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Factors Setting the Tone for Skyworks' (SWKS) Q4 Earnings

Skyworks Solutions, Inc. SWKS is scheduled to report fourth-quarter fiscal 2019 results on Nov 12.

For fourth-quarter fiscal 2019, Skyworks expects revenues in the range of $815 million to $835 million. Uncertainty pertaining to Huawei is keeping management cautious. The Zacks Consensus Estimate for fourth-quarter revenues is pegged at $825.39 million, indicating a decline of 18.2% from the year-ago reported figure.

Non-GAAP earnings are anticipated to be $1.50 per share at the mid-point. The Zacks Consensus Estimate for earnings has been steady for the past 30 days at $1.50, suggesting a decline of 22.7% from the year-ago reported figure.

Notably, the company surpassed the Zacks Consensus Estimate for earnings in three of the trailing four quarters, while missing once, the average beat being 1.15%

In the prior quarter, Skyworks had reported non-GAAP earnings of $1.35 per share, beating the Zacks Consensus Estimate by a penny. Revenues of $767 million surpassed the Zacks Consensus Estimate of $766 million.

Let’s see how things are shaping up for this announcement.

Factors to Consider

Skyworks’ fourth-quarter fiscal 2019 revenues are anticipated to have benefited from ongoing momentum of its wireless communications engines. For instance, Cisco CSCO is leveraging Skyworks’ 802.11ax engines to bolster performance of its enterprise platforms.

Growing influence of the company’s cognitive wireless devices and analog SoCs (system-on-chip) for Vizio wireless subwoofers and sound bars is expected to have driven the fiscal fourth-quarter performance. Notably, the company’s front-end solutions have been selected by Nordic Semiconductor to develop advanced SoC Bluetooth applications.

Moreover, incremental adoption of Skyworks’ expanding product portfolio in the IoT solutions and 5G markets are likely get reflected in the top line in the fiscal fourth-quarter.

Skyworks Solutions, Inc. Price and EPS Surprise

Skyworks Solutions, Inc. price-eps-surprise | Skyworks Solutions, Inc. Quote

Notably, SkyOne and SkyLiTE have been finding application in Oppo, Xiaomi and Vivo flagship smartphones. Further, SkyOne connectivity offering for WiFi has been implemented by Facebook FB in its latest VR gaming headset, Oculus Quest, which is a noteworthy deal win. Further, new 5G massive MIMO deal wins are expected to have aided Skyworks expand total addressable market in the fiscal fourth-quarter.

The company’s fiscal fourth-quarter top line is likely to show growing clout of its expanded Sky5 portfolio with ultra-high linearity enabled MIPI (or Mobile Industry Processor Interface) antenna tuners.

Robust adoption of latest suite of mini circulators for 5G infrastructure, controllers and LNAs by notable infrastructure manufacturers is likely to have positively impacted the fiscal fourth-quarter performance.

In the fiscal third-quarter, the company had initiated volume production of Bulk Acoustic Wave or BAW enabled Sky5 products. In the fourth quarter, the company has commenced shipping of BAW enabled Sky5 products, which is likely to have driven incremental revenues in the to-be-reported quarter.

Nonetheless, Huawei ban is likely to have weighed on the company’s top-line performance. Moreover, growing expenses on product development amid stiff competition from fellow peers including Qorvo QRVO, Broadcom in the radio frequency (RF) semiconductor market is likely to have limited margin expansion in the fiscal fourth-quarter.

Zacks Rank

Currently, Skyworks carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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