While semiconductor company Skyworks Solutions Inc. reported another sales drop in its fiscal first quarter last week, executives say they are seeing increasing interest in their products.
The company on Feb. 3 forecast second-quarter revenue that may top analysts’ estimates, signaling rising demand for its chips used in 5G phones and elsewhere.
“We delivered results above our expectations for the fourth consecutive quarter, with outperformance across revenue, gross margin, and non-GAAP earnings,” Chief Executive Phil Brace told analysts on a Feb. 3 conference call.
“There are billions of devices connected wirelessly, and I think it continues to give us a platform to invest in that for the future going forward.”
Brace, who took over the top job a year ago, has been under the gun to boost sales, which have fallen for four straight years since fiscal 2022, when they reached an all-time high of $5.49 billion. After Skyworks shares reached an all-time high of almost $200 each in 2021, they have steadily declined by about 70% as investors questioned the company’s reliance on Apple Inc. and its ability to find new markets.
Even though sales again fell in the fiscal first quarter, 3.1% to $1.04 billion, Wall Street reacted positively to last week’s news, which included guidance led by expected iPhone 17 strength.
In the two trading sessions after the results were announced, shares rose 9% to $60.92 apiece for a market cap of $9.2 billion (Nasdaq: SWKS).
B. Riley analyst Craig Ellis and research associate Rebecca Zamsky maintained their $60 per share price target along with words of caution.
While “execution seemed strong,” they said, “further ahead though, and off a higher base, we increasingly harbor concerns of a declining smartphone unit market” year over year.
The Apple Connection
Skyworks, which designs and manufactures analog and mixed-signal chips used in wireless communication, automotive, industrial and consumer electronics, is the most valuable publicly traded semiconductor company based in Orange County, and one of the largest locally headquartered tech companies.
The company has been working to reduce its reliance on Apple for sales of its 5G iPhones.
The first-quarter results showed little improvement over the prior three fiscal years, with Apple accounting for 67% of Skyworks’ revenue.
Another warning sign was that Skyworks’ adjusted operating income for the fiscal first quarter was $252 million, down from $284.8 million in the same period last year.
Skyworks expects adjusted earnings per share of $1.04 for the current quarter at the midpoint of the anticipated revenue range, in line with analysts’ estimates.
The company said its potential market continues to grow, supported by demand from Wi-Fi 7, data center and cloud infrastructure programs.
For the current fiscal second quarter, Skyworks projects revenue of $875 million to $925 million, with a $900 million midpoint that was above analysts’ consensus estimate of $891 million. The forecast signals another quarter of declining sales; in the second quarter of last year, Skyworks reported revenue of $953.2 million.
Analysts estimate sales will fall 8% to $3.76 billion this fiscal year and finally begin growing again in fiscal 2027, up 3.3% to $3.89 billion.
Qorvo Purchased Planned
In October, Skyworks Solutions said it had agreed to purchase smaller rival Qorvo Inc. to form a $22 billion business aimed at staying competitive in the increasingly intense semiconductor world (Nasdaq: QRVO).
Skyworks said the deal is subject to the receipt of required regulatory approvals and is expected to close in early 2027.
“I want to emphasize that we are committed to closing the transaction and believe in the long-term value creation opportunity that the deal unlocks for our customers and shareholders,” CEO Brace told the analysts on Feb. 3.
After the latest results were released, Raymond James Vice President Melissa Fairbanks said in a note to clients: “Broad markets remain a clear growth and margin driver, supported by structural tailwinds across long cycle Wi-Fi, auto and datacenter.”
However, she emphasized she was awaiting “progress on the regulatory path to closing the QRVO merger before taking a more positive stance on the stock.”
Declining Sales, Apple
Skyworks and Qorvo are planning to combine at a time when both firms were reporting declining sales as of October.
Both are also heavily reliant on Apple Inc., which accounts for about 40% of Qorvo’s revenue.
Analysts have attributed the sales decline to Skyworks losing business with Apple to rivals such as Broadcom Inc.
Skyworks has about 10,100 employees across 17 countries and about 6,000 customers.
Skyworks’ semiconductors are manufactured in the U.S., Singapore and Japan along with a facility in Mexico, according to Brace. The company has three dozen locations worldwide.
Lantronix CEO Sees ‘Super Cycle’ for Unmanned Aerial Systems
Computer networking products maker and connectivity company Lantronix Inc. is betting on drones this year.
The company last week raised its drone revenue forecast to $8 million to $12 million this year, up from a prior range of $5 million to $10 million.
“Beginning with drones and unmanned systems, calendar 2026 is widely expected to mark the start of an unmanned aerial systems super cycle reflecting accelerating adoption of autonomous platforms across defense and commercial applications,” Chief Executive Saleel Awsare told analysts on a conference call last week.
Lantronix said Feb. 4 the company’s net loss in the fiscal second quarter narrowed to $1.3 million from $2.4 million in the same period a year earlier, even though revenue declined 4.5% to $29.8 million.
Awsare is pushing the Irvine-based company further into what’s called Edge AI—artificial intelligence used directly on devices like smartphones and drones.
“We continued our momentum into the second quarter through disciplined execution, delivering financial results within our guidance range,” Awsare said in a statement.
The company “experienced particularly strong momentum in the unmanned systems industry where sequential growth in drones reflected deeper customer engagement and expansion in program scope.”
On Feb. 5, the day after the earnings release, Lantronix shares fell 1.9% to $6.11 apiece for a market cap of $240 million, as stocks dropped across the board.
Despite that dip, the company’s stock has risen about 45% over the last 12 months (Nasdaq: LTRX).
TTM Technologies Stays on a Roll with Earnings Above Estimates
Printed circuit board maker TTM Technologies Inc. has become a darling of investors, and there’s no sign its attractiveness is slowing.
The company released fourth-quarter earnings on Feb. 4 that topped analysts’ estimates (Nasdaq: TTMI).
The Santa Ana-based company reported adjusted earnings per share of 70 cents, above analysts’ estimates of 68 cents each.
Fourth-quarter revenue came in at $774.3 million, surpassing the consensus estimate of $753 million, for a 19% increase over the same period a year earlier.
“Our medical, industrial and instrumentation end market experienced healthy double-digit revenue growth while aerospace and defense experienced higher than market growth,” said Edwin Roks, president and CEO of TTM Technologies.
The following day, Feb. 5, TTM shares dipped less than 1% to $95.61 apiece for a $9.9 billion market cap. Despite that decrease, the company’s share price had risen a phenomenal six-fold since a 52-week low of $15.77 last April.
As global demand for semiconductors surges, TTM Technologies has emerged as a major beneficiary. The company makes high-tech printed circuit boards that anchor chips in place, a key part of the semiconductor supply chain.
