I wanted to share a few thoughts on SWKS as it is my second largest position and I tend to take a slightly different viewpoint than most because of my unique combination of technical expertise and world travel.
For reference, here are my thoughts from August 2016. These posts are discussing “Why did SWKS fall out of favor on this board?” but are also relevant to why I am still invested today.
http://discussion.fool.com/personally-it-seems-to-me-swks-fell-o…
http://discussion.fool.com/bear-the-theory-was-that-their-produc…
Reading those two posts, I stand by everything I said at that time. Other people have already given numbers so I will instead give a few of my thoughts on trends and patterns which effect SWKS.
What has changed since August?
Here are some trends in the world which may have a positive impact on SWKS:
- Apple iPhone 8.0 Rumors (indicating a possible good year for AAPL)
- Mesh Networking is gaining importance (leading to network upgrades)
- Self-Driving Cars are becoming successful
- IoT awareness is spreading and becoming popular
- Mobile internet access is becoming increasingly important
- 5G is slowly getting closer
I see only one negative trend that impacts SWKS:
- People are upgrading phones less often than in the past
On mobile internet access becoming increasingly important:
As a nomad traveling the world, I see a very consistent trend in developing countries that might have a big impact on mobile device use (cell phones, tablets, etc.):
While WiFi in public locations is becoming more widespread, the hardware is frequently low quality, connecting is often difficult and data speed is often highly variable. In contrast, mobile network data is often far more reliable and at times significantly faster. An increasing number of people I meet opt for a data plan on their phone/tablet and don’t bother connecting to WiFi. Many AirBnB apartments I stay at use a WiFi hotspot connected to a cell network instead of a land line. Tethering a laptop to a cell phone is common enough I encounter average users (no technical knowledge) who know how to set it up.
Skyworks is intimately involved in hardware which supports this trend.
Competition and Expertise
While there are companies competing against SWKS, I do not see any significant change since my initial investment. It is clear that switching out analog chipsets is a bit easier than I initially thought (as indicated by companies using less functionality supported by Skyworks products). However, this seems to be countered by an increasingly difficult problem (analog RF) for which Skyworks has proven they have solutions. Hard to tell if the competition is gaining on Skyworks but I remain hopeful based on what I see at this time.
Conclusions
SWKS is my #2 investment by size and also my #2 investment by percent gain. The price today seems a little bit high after the jump when earnings were released but not excessively so. I am staying invested for now but am watching news and trends a bit more carefully than normal. The biggest danger I see is continued market elation driving the price to a point where it is guaranteed to fall from. While I love the company prospects, the fact that they sell products to other companies (and not direct to consumers) means they don’t control their own fate and thus are almost certain to have unpredictable results at each quarter. This could easily lead to a situation where the price drops at earnings even on good news.