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Apple Supplier Skyworks' Q3 EPS Seen Skidding For Sixth Quarter

Skyworks Solutions is expected late Thursday to report fiscal Q3 earnings that declined vs. last year for the sixth straight quarter. (Skyworks Solutions)

Apple (AAPL) supplier Skyworks Solutions (SWKS) is expected late Thursday to report a sixth consecutive quarter of year-over-year declines in earnings. In its fiscal third-quarter report, Skyworks also is forecast to post sales that recovered minimally from the company's slowest-ever growth period.

For fiscal Q3, the consensus of 24 analysts polled by Thomson Reuters models $750.2 million in sales, down 7% on a year-over-year basis vs. 2% growth in the prior quarter. But $1.21 earnings per share ex items would fall 10%.

Skyworks' sales and EPS have both decelerated for five consecutive quarters. Like Apple's other chip suppliers, Skyworks was tugged down in April on Apple's first quarterly sales drop since 2003 and first-ever iPhone sales dip.

Unlike fellow Apple supplier Qualcomm (QCOM) -- set to report its fiscal Q3 on Wednesday — analysts don't expect a Q4 recovery for Skyworks. Wall Street's model calls for a 6% decline in sales and a 7% decline in EPS in fiscal Q4.

Skyworks rivals Broadcom (AVGO) and Qorvo (QRVO) in supplying radio-frequency chips for Apple's iPhones. But Broadcom recently gapped up with the $37 billion merger with the former Avago, and Qorvo is leading Skyworks in the carrier-aggregation battle, Citigroup recently said.


IBD's TAKE: Skyworks stock has a middling IBD Composite Rating of 54, meaning it underperforms nearly half of its rivals. But rival Broadcom boasts a top-ranking CR of 99 and its Electronics Semiconductor-Fabless industry group is No. 23 out of 197 groups tracked. Take a look at Broadcom's stock checkup.


Both are more diversified than Skyworks, Citigroup says. About 80% of Skyworks' total revenue is tied to smartphone sales. On a global basis, smartphones are experiencing a decline as Apple struggles to beat its own records and China nears saturation.

Year-to-date, Skyworks stock is down 15% vs. IBD's 38-company Electronic Semiconductor-Manufacturing industry group, which is up 2% for the year.