Skyworks Solutions Inc (SWKS) shares are trading lower in the premarket on Wednesday following the company’s fourth-quarter earnings report released on Tuesday. While the company exceeded analysts’ expectations for adjusted earnings per share, revenue fell slightly short of estimates.
The company reported adjusted earnings per share of $1.55, surpassing the consensus estimate of $1.52. However, quarterly sales of $1.025 million were in line with analyst expectations. Skyworks also declared a quarterly dividend of 70 cents per share, payable on December 24th to stockholders of record as of December 3rd.
Despite the mixed results, Skyworks remains optimistic about its future prospects, particularly driven by the potential of artificial intelligence (AI) to drive a significant upgrade cycle in the smartphone market. The company generated an annual operating cash flow of $1.825 billion and free cash flow of $1.668 billion, highlighting its strong financial performance.
Liam K. Griffin, Skyworks’ Chairman, Chief Executive Officer, and President, expressed confidence in AI’s ability to boost demand for advanced radio frequency (RF) technology. He stated, “For the second year in a row, we generated over $1.6 billion of free cash flow and ended fiscal 2024 with a record 40% free cash flow margin. Looking ahead, we believe AI is poised to ignite a transformative smartphone upgrade cycle, propelling the demand for higher levels of RF complexity.”
However, the company’s near-term outlook remains somewhat cautious. Skyworks projects first-quarter 2025 revenue to be between $1.05 billion and $1.08 billion, slightly lower than the $1.096 billion consensus estimate. Adjusted earnings per share are projected to be $1.57 at the midpoint of the revenue range, falling short of the $1.72 analyst estimate.
Kris Sennesael, Senior Vice President and Chief Financial Officer of Skyworks, attributed the projected sequential growth in the mobile business to seasonal product ramps. While anticipating modest sequential growth in broad markets, he acknowledged the presence of excess inventory in certain segments, suggesting a return to year-over-year growth in the future.
Investors seeking exposure to Skyworks Solutions can consider the Global X Internet of Things ETF (SNSR) and the First Trust Nasdaq Semiconductor ETF (FTXL).
As of the last check on Wednesday, SWKS shares were down 6.65% at $81.25 in the premarket.
