Skyworks Solutions: Well Positioned for Growth

Jul. 6.10 | About: Skyworks Solutions, (SWKS)

We recently reiterated our "OUTPERFORM" rating on Skyworks Solutions Inc. (NASDAQ:SWKS).

Skyworks is well positioned to benefit from recent trends in the handset market, which are favorable for increasing the dollar content for RF components. The company has tie-ups with major Original Equipment Manufacturers ("OEMs") that underscore the company's success in gaining market share.

Skyworks continues to capitalize on the rapidly expanding opportunity for analog semiconductor solutions fueled by the increasing demand for smart phone, broadband access, network infrastructure and smart grid applications.

The demand for mobile internet applications is exploding with the broad proliferation of smart phones, net books, note books, caplets and other forms of embedded wireless devices.

Skyworks continues to consolidate its market share across the mobile internet spectrum. This covers everything from net books and data cards to smart phones and even entry level handsets.

The increasing demand for smart phones continues to drive growth for the company as Skyworks is uniquely positioned as a supplier to all leading smart phones OEMs. Skyworks is supporting all five top tier hand set OEMs and all key smart phone suppliers.

Smart phones are projected to grow by 42% in the next two years providing a significant opportunity for growth. Network infrastructure also provides a significant opportunity for growth as mobile operators begin to install new base stations, routers and upgrade their network equipment to avoid network traffic jams and preserve their highly profitable data service revenues.

Skyworks has developed a portfolio of network infrastructure solutions including attenuators, VCO synthesizers, mixers, low noise amplifiers and demodulators.

Additionally, Skyworks has already transitioned development resources from its low margin 3.5G and 4G cellular transceiver programs to higher growth, adjacent analog markets. The company has a broad portfolio of over 250 analog products. This business increasingly provides the company with high margins, diversified customer base along with annuity product life cycles.

Skyworks also continues to leverage its standard analog catalog business to address a variety of mature as well as new vertical markets including automotive, avionics, medical, military and industrial.

We remain encouraged by the company's recent performance and guidance and maintain an "OUTPERFORM" rating on the stock, supported by Zacks Rank #2.