FWIW, Skyworks already pre-reported earnings when they announced the acquisition of PMCS, so I doubt there will be much new come earnings (other than guidance, I suppose, and maybe an update on their IoT growth and some additional color).
I think the decline has a lot to do with slowing overall growth of the smartphone industry (SWKS’ participation in many manufacturers’ products is a negative here), fueled in part – as Rob mentioned – by AAPL skepticism. In truth, I suspect AAPL is rapidly stealing share from Android manufacturers and will experience above-industry growth, but that doesn’t necessarily help SWKS if it just takes business away from another of their customers. But total industry growth discounts the huge wave of upgrading that is likely to occur as people adopt LTE, and SWKS makes more money from LTE phones. Skyworks has said they expect to grow faster than the industry at large.
People also seem very skeptical of the PMCS acquisition, and I guess some skepticism is generally healthy regarding these things. But this isn’t their first rodeo: Skyworks is a pretty acquisitive company, and they’ve acquired and successfully integrated “complementary” businesses in the past, such as Advanced Analogic Technologies that made power management technology (battery charges, DC/DC converters, LED drivers – not RF stuff) a few years back. The reasoning was even very similar: enter new verticals, while filling in some additional pieces that would allow Skyworks’ existing solutions to add more value in the areas they were already serving.
I think people are looking at PMCS and seeing no synergies with Skyworks’ traditional mobile business, and therefore concluding it’s a Hail Mary trying to buy their way into a new industry as mobile growth slows. While it will get the company into new verticals, I do think that it also likely fills in some additional pieces for Skyworks’ IoT solutions business that will let them add more value. So to me, it looks like more of the same strategy, but with their small (but rapidly growing) IoT business rather than their mobile business.
But it’s hard to say how long it’ll take for the company to prove the worth of the transaction, even it’s successful: it’ll take some time to close, and then it’ll be at least 6 months for things to get integrated, and then probably multiple years for combined solutions to genuinely gain traction in new products. So it’s a long-term piece of the puzzle, and it’s hard to know how much ongoing proof the market will demand before it’s willing to give SWKS the benefit of any remaining doubts.
As I’ve said before, while their mobile business has done well and continues to benefit from tailwinds, I think a long-term investment in this company is about IoT, and so I think it makes sense to see the company apply its proven strategy to that business as well.
All just my opinion, though.
Long SWKS, AAPL