news beyond Brexit:
Skyworks Powers Huawei’s Next Generation Smartphones
Jun 27, 2016 08:00:00 (ET)
World’s Third Largest OEM Leveraging 10 Skyworks Devices Including the Low, Mid and High Band Architectures of the SkyOne(R) Ultra 2.0 with SkyBlue™ Enabling Technology; Solutions Solve LTE Advanced Carrier Aggregation Challenges
WOBURN, Mass.–(BUSINESS WIRE)–June 27, 2016-- /I
But, my today’s move was to move 0.4% of my portfolio from cash to INFN.
Bedtime here,
KC
Y’all humans have got Monkey’s brain in a twist yet again. Any idea why when a small island of big brains votes to isolate itself from the rest of the world the price of SWKS, a company with a well-below average p/e of 11 (now 10) loses 15% of its value in two trading days? What’s the logic (or lackthereof) here?
Are we going back to the dark ages where the internet will be no more and smart phones will no longer matter to people? And the interconnected stuff of things will be put on hold and smart homes and smart cars won’t become a thing?
And isn’t the rationale for holding a company with a low p/e that when poop meets the device that makes wind, the price drop won’t be as precipitous as a company’s that has a high p/e? And yet SWKS the stock is acting as though it doesn’t have real earnings.
Will this, too, pass, or are there rotten bananas in the Skyworks business here that Monkey hasn’t put in the compost pile? Any thoughts? Only thing Monkey found himself was the post upboard which seems like another positive development.
Befuddled,
Monkey
(Long SWKS)
Will this, too, pass, or are there rotten bananas in the Skyworks business here that Monkey hasn’t put in the compost pile? Any thoughts? Only thing Monkey found himself was the post upboard which seems like another positive development.
There is one technology risk, that is high end BAW filters. These are being used more in high end phones and SWKS is lagging in this department compared to the other two big players (AVGO and QRVO). Thus they have been losing component share in some high end phones this cycle (like the Samsung GS7). So things could get choppy while SKWS catches up in this department.
All in the all SWKS is still great as valuation is low, balance sheet is great, management is good and there is a long runway for Internet connected devices (IoT and phones).
Sincerely,
Charlie
Morgan Stanley piles on with an underweight ~ $61 PT today.
JT
http://www.marketbeat.com/stocks/NASDAQ/SWKS/?RegistrationCo…
Charlie- thanks for the post. Do you know what SWKS is doing to try to close the gap?
Agreed that the valuation is incredibly low for SWKS. I’ll probably buy some more in the next couple of days.
Morningstar on SWKS:
http://analysisreport.morningstar.com/stock/research/c-repor…
It’s from earlier this month, but the basic landscape hasn’t changed since then.
Fungi
(no position in SWKS)
Hi rbuckyfuller.
Skyworks’ strategy with regards to bulk acoustic wave (BAW) filters has been changing over time. Their primary goal is to be able to manufacture BAW filters themselves. The joint venture with Panasonic was vastly increased Skyworks filter manufacturing capabilities and Skyworks has been investing in increasing that capacity further.
In the interim, Skyworks has been advancing TC-SAW (temperature-compensated surface acoustic wave) filters to the point where they are capable of filtering bands which previously required BAW filters. This is a positive for customers, as TC-SAW filters are less expensive (and sometimes more compact) than BAW. But it is not a complete solution - TC-SAW is encroaching on BAW, not threatening to replace it.
Here are management comments from “recent” conference call transcripts that will give you a sense of Skyworks response to their lack of BAW capability. Italicized text is straight from the Seeking Alpha links below. I’ve added some additional text (in brackets and not italicized) for clarity.
3Q14: “There are more and more narrow band spacing where we can provide a great differentiated product with a TC SAW, and Panasonic is a performance and IP leader there, hands down. And we see a limited number of bands where we need to partner for BAW acoustic processes, which we are doing. So we have a complete offering, and I think we’re the only company in the world that is offering modules that incorporate SAW, TC SAW and BAW. And so it not only gives us the ability to eliminate margin stacking as we buy filters, we now will produce them, but it also gives us a competitive advantage to move TC SAW into more and more bands.”
4Q15: “And with respect to bulk acoustic technology, we do see that there are bands that we’re going to need and so between partnerships and our own internal development, we expect to be in production with BAW devices by 2017.”
…
“… we’ve added about a tripling of capacity with the new factory … we acquired, we’ve been outfitting. That’s why you saw a little bit of increase in the capital [expenditures].”
…
“… and further to that, think of this as a high performance filter site, all topology. So bulk acoustic wave opportunities, temperature compensated surface acoustic wave, standard surface acoustic wave. It is a first-class facility and we’re funding it in the right way. We’ve got great people, qualified proven people. We’re upping our game in design engineering. We’ve got a war chest of IP [Intellectual Property acquired with the Panasonic joint venture]. So this is going to be a real driver, a competitive driver, for us.”
…
[The CFO pointed out that Skyworks is leasing the factory (OpEx), but buying equipment to place in the factory (CapEx).]
1Q16: “if you look across the world today, most world phones, most smartphones don’t use BAW technology, they have a different configuration or a different band lineup that doesn’t require it. But for those customers who are looking for sort of a low, mid, high, very-high performance, truly a world phone, what BAW will do will open up high band for us, in which we don’t participate, market we do not participate in today. So it will increase our TAM and we’ll get there by '17.”
http://seekingalpha.com/article/2321825-skyworks-solutions-s…
http://seekingalpha.com/article/3654806-skyworks-solutions-s…
http://seekingalpha.com/article/3849526-skyworks-solutions-s…
I hope this helps.
Thanks and best wishes,
TMFDatabaseBob (long: SWKS)
Peace on Earth
Excellent discussion about the competitive landscape and specific RF technologies used in smart phones.
The Morningstar review and Bob’s review were especially helpful.
Morningstar reinforces what SWKS says about their competitive advantage namely via packaging a full set of reliable components into a single solution at impressive scale.
Their TC-SAW tech has allowed them to replace BAW for some bands which has helped them lately. It is possible another player may develop the same tech or reduce costs of BAW to compete. But for now, they seem to have an advantage.
It will be interesting to see how BAW development progresses into '17 and if they meet their goals along with continued diversification away from smart phones.
Good stuff and thanks!
AJ
Thanks Fungi and Bob. In sum, SWKS is working on it, but won’t be there until 2017.
http://www.investors.com/news/technology/intels-apple-iphone…
Whilst I find this a pretty rubbish article and I am not sure about the conclusions, as we have seen with Qualcomm in the US Samsung S7 edition it is important who’s chips make it into end units due to the varying alliances and partnerships.
Intel into Iphone is a disruptive event to watch.
Ant