Skyworks Solutions CEO Discusses Q4 2010 Results – Earnings Call Transcript
Skyworks Solutions (
)
Q4 2010 Earnings Call
November 4, 2010 05:00 pm ET
Executives
David Aldrich – President and CEO
Donald Palette – VP and CFO
Liam Griffin – SCP, Sales and Marketing
Steve Ferranti – IR
Analysts
Ittai Kidron – Oppenheimer & Co.
Craig Ellis – Caris & Company
Anthony Stoss – Craig Hallum Capital
Jonathan Goldberg – Deutsche Bank
Parag Agarwal – UBS
Quinn Bolton – Needham & Co.
Nathan Johnson – Pacific Crest Securities
Eric – Stifel Nicolaus
Richard Shannon – Northland Securities
Edward Snyder - Charter Equity Research
Cody Acree – Williams Financial Group
Presentation
Operator
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Skyworks Solutions Inc. F4Q09 (Qtr End 09/30/09) Earnings Call Transcript
Good afternoon and welcome to the Skyworks Solutions fourth quarter fiscal year 2010 earnings call. This call is being recorded. At this time I’d like to turn the call over to Steve Ferranti, Investor Relations for Skyworks. Mr. Ferranti, please go ahead.
Steve Ferranti
Thank you, Robby. Good afternoon everyone and welcome to Skyworks fourth fiscal quarter 2010 conference call. Joining me today are Dave Aldrich, our President and Chief Executive Officer; Don Palette, our Chief Financial Officer; and Liam Griffin, our Senior Vice President of Sales and Marketing.
Dave will begin today’s call with a business overview, followed by Don’s financial review and outlook. We will then open the lines for your questions.
Please note that our comments today will include statements relating to future results that are forward looking as defined in the Private Securities Litigation Reform Act of 1995. Actual results may differ materially and adversely from those projected as a result of certain risks and uncertainties, including but not limited to those noted in our earnings release and those detailed from time to time in our SEC filings.
I would also like to remind everyone that the results and guidance we will discuss today are from our non-GAAP income statement consistent with the format we have used in the past. Please refer to our press release within the investor relations section of our company website for our complete reconciliation with GAAP.
I will now turn the call over to Dave for his comments on the quarter.
David Aldrich
Thank you, Steve and welcome everyone. I’m pleased to report today that Skyworks exceeded the upwardly revised fourth quarter outlook that we provided at our September analyst day meeting demonstrating solid execution and a strengthening competitive position.
Specifically in the quarter, we delivered revenue of 313 million. That is up 14% sequentially and is up 37% year-over-year. We expanded our gross margins to 43.8%, and our operating margin to 26.1%. We improved our operating income by 92% year-over-year to 82 million and we posted $0.43 in earnings per share. We also strengthened our balance sheet during the quarter increasing our net cash position by 69 million and exiting the quarter now with 459 million in cash.
Our strong fourth quarter results were driven by our mobile internet and our diversified analog growth edges. First, with regard to mobile internet, we are continuing to see increasing momentum given consumer’s growing appetite for anytime, anywhere connectivity. And by all account global adaption of smart phones is happening at an accelerating pace, now at least 4 times the growth rate of the traditional cellular handset market. And to be sure that we benefited from the rising tide of increasing RF content associated with these band-intensive 3G and 4G platforms but more importantly as demonstrated by our more than 35% year-over-year growth rate, Skyworks is on an even steeper growth trajectory.
The growth is being driven by: First, recent share gains stemming from our strong relationships spanning all leading smart phone and tablet OEMs. This is coupled with our technology leadership, our integration capabilities, and our scale advantages. At a higher level, there are a number of factors that are contributing to our growth in the mobile internet sector. To start, we are increasingly seeing multiple devices per subscriber. In fact AT&T is now projecting mobile penetration rates to reach 300% within the U.S. over the next 3 years. This means three mobile devices for every man, every woman and every child in the United States by the year 2014.
And this growth will be fuelled by a host of new devices above and beyond traditional cellular handsets and even above and beyond smart phones encompassing high resolution tablets, USB modems, home networks and still yet to be introduced internet connective devices. Proliferation of these devices within the U.S. represents we think only the tip of the iceberg as compared with the substantially larger global opportunity as the developing world becomes even more connected.
Further, the move to 4G represents a significant market expansion opportunity for us. Verizon recently announced that it would have LTE service in 38 cities this year and operators throughout the world are announcing plans to rapidly follow suit. By early 2011, we expect to see a host of LTE capable USB modems, tablets and smart phones.
As this next wave approaches, Skyworks has a clear early mover advantage having powered not only the world’s first commercialized LTE USB modem but also the very first LTE-based phone on the market. And finally, we are solidly out in front of the rapidly emerging tablet segment where we are seeing exponential growth. The applications are seemingly limitless today and these platforms are enabling entirely new usage models, everything from e-health, to replacing textbooks, to watching high definition football game on direct TV Sunday Ticket to-go.
Early tablet adaption rates continue to exceed expectations and we conservatively estimate this market can surpass 200 million units by the year 2014, creating an incremental billion dollars of addressable market for us. You see these RF content rich devices rival and in some cases they exceed the dollar content in high end smart phones and here again Skyworks maintains a clear market leadership position having shipped over 4 million units into tablet applications in the fourth quarter alone.
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