October 12, 2005

Skyworks Solutions Inc. said it expects to report fourth-quarter revenues below the low end of the company's previous guidance.

Based on a preliminary review of unaudited results, the company said it expects to report revenue of $190 million for the quarter, below the $194 million guidance it provided in July. Consensus estimates were $198.7 million, said the company.

Skyworks attributed the shortfall to a one-time payment to a customer recorded during the quarter, as well as a shift in demand late in the quarter away from hub/consigned products and toward GPRS, EDGE and W-CDMA front-end modules.

The company said it was unable to support that demand within the quarter given material and capacity constraints.

"We are obviously disappointed with our preliminary fourth-fiscal-quarter results and are taking aggressive steps to eliminate supply-chain bottlenecks, ensuring our ability to fully capture shifting customer demand going forward," said David J. Aldrich, Skyworks' president and chief executive officer.

"We believe the payment to a strategic customer is a good investment in our relationship and should benefit future periods.

Meanwhile, we are experiencing recent order strength driven by the customer adoption of our newest front-end module solutions, Helios EDGE radios and family of linear products, which bodes well for accelerating growth and our ability to deliver on our commitment of expanding margins as we enter the December quarter."

The company said it plans to release its fiscal fourth-quarter and year-end results Nov. 2.

"While we do not expect these capacity constraints to extend beyond the December quarter, it is very disappointing for Skyworks to be facing these problems heading into what should be its most profitable time of year," wrote Jason Tsai with ThinkEquity Partners L.L.C.

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The firm makes a market in Skyworks' securities.

"Given what we have heard from various contacts in the supply chain, we believe that the problems are occurring in the back-end packing and testing, and while these bottlenecks should be alleviated by year-end, we believe that Skyworks will lose out on some of the revenues we had anticipated it booking in the fourth quarter."

Shortly after the company's announcement, Skyworks' rival RF Micro Devices Inc. said it would surpass its previous revenue expectations.

The company said it would score revenues of $177 million in its upcoming quarter, above its predictions of $170 million. Investors cheered, sending RF Micro Devices' stock up more than 4 percent to $5.44 per share.

Source: RCR News