SWKS: Stock market pain in China

Recent weeks have seen a 25-30% drop in the Chinese stock markets. Perhaps this pain will negatively affect smartphone sales in China. China is in the midst of a 3G to 4G upgrade cycle. If enough people feel the pain of wealth destruction due to stock market declines, will it delay sales of smartphone sales to Chinese consumers? This idea could very well be the reason for SWKS’s recent stock price decline. If enough people delay purchasing phones in China then it could affect SWKS in the current quarter (ending 9/30) but I would expect last quarter (ending 6/30) to be unaffected. I would also think that any reduced sales in China would merely be a delay as consumers will eventually upgrade.

Chris

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If enough people feel the pain of wealth destruction due to stock market declines, will it delay sales of smartphone sales to Chinese consumers?

If the answer to this question is yes, the June quarter should be fabulous, given the run-up of over 55% for 2015 prior to the recent drop. People should have felt like they can buy their entire family a new phone with those returns.

But today’s price is about the price it was on March 27, which is still up over 15% in 2015 and up over 80% the past year.

Let’s hope that we get a bigger correction so that we could buy even more of our favorites, including Skyworks.

DJ

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