Skyworks Solutions (NASDAQ: SWKS) experienced a decline in its stock price this week following the release of its second-quarter results for the current fiscal year, ending March 29. The specialist in connectivity technologies saw its share price drop by 11.3% compared to the previous week’s close, according to data from S&P Global Market Intelligence.
Despite reporting earnings that exceeded market expectations and sales that were in line with Wall Street’s forecasts, Skyworks’ forward guidance prompted investors to divest from the stock.
Skyworks’ sales are slipping
In fiscal Q2, Skyworks reported non-GAAP (adjusted) earnings per share (EPS) of $1.55 on sales totaling $1.05 billion. This performance slightly surpassed the average analyst estimate, which had projected adjusted per-share earnings of $1.52 on sales of $1.05 billion for the period.
However, the company experienced an 8.7% year-over-year decline in revenue during the quarter. Management attributed this downturn primarily to lower-than-expected demand in the mobile segment. It appears that sales declines are expected to persist in the near future.
Q3 guidance spooked Skyworks shareholders
For the third quarter of its current fiscal year, Skyworks anticipates per-share earnings of $1.21 on revenue of approximately $900 million. Prior to the recent earnings release, analysts had forecasted earnings per share of $1.46 on sales of $1.02 billion.
Skyworks’ Q3 guidance significantly undershot the market’s expectations, overshadowing the company’s earnings beat in Q2. If the company achieves its sales target for the current quarter, it would represent a sequential quarterly sales decline of approximately 14%. Similarly, meeting this target would entail a roughly 16% sales decrease compared to the approximately $1.07 billion in revenue recorded in fiscal Q3 last year. Adjusted earnings are also projected to decline by roughly 16% year over year in the current quarter.
