Updated from Oct. 30

Sullen investors knocked off nearly a fifth of the value of

Skyworks Solutions

(SWKS) - Get Report

a day after its third-quarter earnings report, disappointed that its performance trailed that of rivals.

Shares were off $2.05, or 19.1%, to $8.69 in Friday trading.

The pounding took place even though the wireless chipmaker met Wall Street's sales expectation and posted a loss that was slightly narrower than expected. Investors honed in on Skyworks' flat sales results and minimal upward guidance, which looked relatively lackluster compared to double-digit growth at peers like




RF Micro Devices



The company chalked up its soft wireless sales to excess inventory at small Asian-based ODMs (original device manufacturers), to which it's more heavily exposed than its competitors.

"Although several key segments and customers did show aggressive sequential growth, the company's aggregate wireless revenue only grew 1.8%, versus many of its wireless chip peers, which grew 20% to 24% sequentially," noted Cody Acree of Legg Mason in a morning note.

"While we are disappointed that Skyworks was not able to benefit completely from the significant recent improvements in the handset market and we understand the disillusionment many investors undoubtedly feel towards the story, we also note that there were several positive points to the September results," said Acree. "Most important, profitability is likely to be achieved two quarters ahead of expectations and we are raising our estimates across the board."

He increased his fiscal year 2004 forecast to $680.9 million from $647.5 million, with EPS increasing from 3 cents to 12 cents. Acree has a buy on the stock; his firm hasn't done banking for Skyworks.

At Pacific Growth, analyst Sandy Harrison maintained a hold rating on Skyworks' shares, saying the company's long-term strategy to win customers with more integrated silicon "remains viable but may play out more slowly than originally expected." He added, "In the near term we believe the stock is likely to come under pressure as investors justifiably take a more 'show me' approach in light of the recent results and the coming overall seasonally challenging March quarter." Pacific hasn't banked for Skyworks.

For its fiscal fourth quarter, the company posted in-line sales of $150 million, flat with last year's levels.

It saw a loss of $42.9 million, compared to a loss of $1.5 million for the same quarter last year.

The loss reflects restructuring charges of $32 million, of which about $29 million was noncash.

That translated to a loss of 30 cents a share. On a pro forma basis, the loss was 7 cents a share, a penny above expectations.

Skyworks said it expects sequential sales to increase 10% in the December quarter, implying sales of about $165 million. That's a hair above the consensus estimate for $163.4 million.

The chipmaker also guided to its first-ever profit of a penny a share, above Street expectations for a loss of a penny a share. Analysts currently don't expect a profit until the June quarter of 2004.

To put Skyworks' results in perspective, it's worth noting that earlier in the earnings season, rival TriQuint reported double-digit year-over-year sales growth in its September quarter and guided next quarter sales higher above estimates than Skyworks.

RF Micro Devices, which saw sales grow nearly 37% in its September quarter, also issued guidance well above expectations on sales and profit.