Frankly I would much rather be in a company like ARM’s position in the silicon market than Skyworks. Heads or tales ARM wins. ARM has a superman.
Well, their earnings yield is less than half of Skywork’s. So they have to grow much faster and/or much longer for them to be worth more. They’d better have a super moat to justify the current price.
The relative valuation is far from trivial.
Hi Commoncents33
Let me try to re-gather all the comments from the thread to save a gzillion posts in different directions…
Moreover, one relatively weak quarter after doubling eps over the past two years, and a quarter which is historically one of the weakest at that, does not a trend make. Seriously. Check back in six months
Well this is a 5 quarter trend of declining growth numbers that is forecast to continue and turn negative so it is not a one quarter. Also yes we are talking seasonality but year on year is still relevant as presumably the seasonal weakness was there in the year ago quarter.
re India But that’s because of lack of infrastructure. Smartphones are enormously more compelling with 4G than 2G. The infrastructure is coming. If you build it, they will come.
I don’t disagree - I was merely pointing out that India was one of the last dominos to fall not the first in emerging markets. Yes India has huge potential but there is a limit after that for 4G. Probably first waves of 5G markets roll out will be a more significant factor than last waves of 4G in whatever markets are left.
Yes cashflow is nice but frankly if earnings are falling then this is more worrying. Cashflow yield was not a Saul criteria whilst 1YPEG <1 and 20% earnings growth are.
ARM has a very different business model - what they miss on high margin components they gain on long term earning streams and broader business base with a stronger grip on the market place.
Yes I saw Google’s announcements, yes I get the broader business environment but I don’t see these as relevant to the Skyworks excuses.
A