It’s Thursday, so you know if I don’t post on any other day, Thursday is almost a guarantee. This week I want to take a look at a company in the Apple Inc supply chain called Skyworks Solutions, Inc. Having capable hardware to comply with the extremely high security standards Apple has set out for itself is vital in how Apple does business. Fortunately, Skyworks has worked its way into the good graces of Apple to provide this high caliber hardware, and from there has gained other clients like Volkswagen, General Motors, Google and Samsung.
Company Snapshot (Yahoo! Finance Data)
Name: Skyworks Solutions, Inc. (as of close of business 2/18/2016)
Current Price: $62.07
52 Week High Price:$112.88
52 Week Low Price: $60.07
Market Capitalization: $11.9B(Mid Capital)
Price/Earnings (P/E Ratio): 15.18
Earnings/Share (EPS): $4.0955
Dividend: $1.04/year (1.67%)
Industry: Semi-conductor and Related Equipment
Primary Business: Producers of analog semiconductors
Skyworks put up great 1st quarter numbers for 2016 in the semiconductor industry. They were able to generate $926.8 million in revenue, which is a 15% increase from the 1st quarter revenues for 2015. This is a case where having a long list of diverse products and clients really is beneficial for a company. Skyworks offers a long list of products from amplifiers, analog switches ,and mixers to circulators and synthesizers. And as I mentioned before, Skyworks is not completely dependent upon one of its clients for significant revenue generation. It has relationships with companies in the electronics manufacturing sectors, chemicals/materials sector and the consumer discretionary sector. Being involved in various associations like the IEEE and Global TD-LTE Initiative I’m sure puts Skyworks in front of potential and recurring customers on a regular basis.
Another good thing about Skyworks is the fact that they have NO DEBT! You hear me?! They have no debt!! That’s an incredible feat for a company in the business of manufacturing. They have had consistent growth in net income and still have a surplus of cash on hand at the end of the year.
Umm…lets just skip this section because I’m really not sure at this point there’s a bad to this company right now. Like I hate to believe that there isn’t a downside, because there is a downside to everything, but the current price, and the opportunity that Skyworks is presenting through exceeding expectations for revenue, net income and having positive cash flows and no debt…I’m really drawing a blank.
With some of its competition just getting over lawsuits on patent infringement like Marvell Technology and dealing with higher levels of debt like Semiconductor Manufacturer International Corporation, Skyworks is in a position that it can really gain market share while other companies are trying to recover in this bear market. I’m sure Apple will soon be placing an order for brand new hardware once they figure out how to redesign their newer encrypted technology. I’m sure Samsung is probably already at the door looking for what they can add to the upcoming Galaxy S7 to make it even more appealing to #teamAndroid. But what happens once the competition recovers with similar technology? Price wars? Are the parts these companies produce easily interchangeable? If they are, what is to stop a chunk of these current clients Skyworks has to turn to use another supplier for these parts?
I have more questions than answers for the ugly, but Skyworks looks like something I’d like to get my hands on.
Until next post folks…oh and you’re welcome MJ! lol
*Nothing in this post is any type of advice. Just giving my perspective on this company*