Tech stock under pressure: Skyworks Solutions Inc (NASDAQ: SWKS)

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Skyworks Solutions Inc (NASDAQ: SWKS) stock fell over 4% on 24th January, 2020 (as of 10:41 am GMT-5; Source: Google finance) after the company’s weak outlook. For the second fiscal quarter of 2020, the company anticipates revenue to be between $800 million and $820 million. At the midpoint of the range, the revenues are expected be flat to last year’s Q2. However, including Huawei or excluding, in the second quarter of fiscal ’19 and fiscal ’20, revenue is expected to be up mid-teens year-over-year. The company expects gross margin to be between 50% and 50.5% and operating expenses to be of approximately $135 million.

For the first quarter of FY 20, the company has generated the First fiscal quarter cash flow from operations of $398 million, incurred capital expenditures of $111 million, resulting in $287 million of free cash flow on $896 million of revenue translating into a strong free cash flow margin of 32%. The company had ended the first fiscal quarter with cash and investments of $1.2 billion, and have no debt.

SWKS in the first quarter of FY 20 has reported the adjusted earnings per share of $1.68, beating the analysts’ estimates for the adjusted earnings per share of $1.65, according to the Zacks Consensus Estimate. The company had reported 7.8 percent decline in the adjusted revenue to $896.1 million in the first quarter of FY 20, beating the analysts’ estimates for revenue by 1.80%. The revenue growth is driven by the successful launch of flagship phones and the early success of our Sky5 product portfolio as new 5G phones start ramping globally. The company posted the gross profit in the first quarter of $449 million resulting in a gross margin of 50.1%, in line with the company’s expectations. Operating expenses were down 4% year-over-year to $134 million, as the company continued to prudently manage opex while making the necessary investments to accelerate future growth of the business. The company has generated $315 million of operating income, which resulted into an operating margin of 35.2%, up 120 basis points from fiscal Q4.

Additionally, the company has paid $75 million in dividends and repurchased 742,000 shares of the common stock for a total of $74 million. During the last 12 months, the company had returned 87% of free cash flow back to the shareholders through a combination of the dividends and share buyback program.

For the second fiscal quarter of 2020, the company anticipates revenue to be between $800 million and $820 million. At the midpoint of the range, the revenues is expected be flat to last year’s Q2. However including Huawei or excluding, in the second quarter of fiscal ’19 and fiscal ’20, revenue is expected to be up mid-teens year-over-year. The company expects gross margin to be between 50% and 50.5% and operating expenses to be of approximately $135 million.

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