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Record Earnings Cap A Fine Year For Skyworks

The Woburn, Massachusetts, PA maker has beaten analysts' estimates for the second quarter in succession and is looking back at baseband to continue the trend into the next fiscal year.

Analysts have underestimated Skyworks Solutions once again, as the GaAs chip maker delivered quarterly profits of $22 million and earnings-per-share one cent above predictions.

At $0.14 per share the earnings in the quarter ended on September 28 were the highest in the company s history and brought another record, $30 million in cash flow from operations.

All this comes on the back of revenues of $190 million, down slightly from the equivalent final quarter of the previous fiscal year, when Skyworks divested its baseband business.

Just as this strategy is literally paying dividends in efficiency benefits, the company has again been industriously making business moves.

Skyworks is finally increasing its Newbury Park, California, fab from 4 to 6-inch GaAs wafer manufacturing, but says that this will have a minimal negative impact on its finances.

“We have done a lot of work over the last couple of years to provide copy examples for our critical processes," explained Skyworks CEO Dave Aldrich.

These processes are in place at Skyworks foundry partners and will enable the company to perform the switch without too much disruption. Skyworks already owns equipment that will accommodate the 6-inch process and estimates that the remaining purchases will fit easily into its existing capital expenditure budget.

Skyworks has also recently purchased Freescale Semiconductor s GaAs power amplifier (PA) designs and rights to 16 HBT and RF MEMS patents from the California-based Rockwell Science Center.

According to Aldrich, the deal with Freescale has extra importance because it adds the silicon chip giant to the stable of companies that Skyworks collaborates with on baseband electronics and reference designs. This is an area into which the company is aggressively, and seemingly successfully, expanding.

“We captured several reference designs with the industry's top baseband providers, which will translate into meaningful revenue for fiscal year 2008," Aldrich commented.

Amongst the companies that Skyworks is working with, Aldrich highlighted China s MediaTek as providing access to low-cost, developing markets. The company has also been busy developing relationships with ST Microelectronics and Broadcom, adding to an existing partnership with Infineon in Korea.

These moves look like they are intended to pre-empt the major threat to Skyworks business seen by analyst Aaron Husock from Morgan Stanley, a sooner-than expected switch to single-chip baseband/transceivers.

It seems appropriate that, after the company divested its baseband interests and recorded a $96 million loss a year ago, a refocused and profitable Skyworks is now focused on baseband collaborations to continue its expectation-confounding record.

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