Skyworks Solutions' Earnings Results Show A 'Fundamental Strength In Apple'

Skyworks Solutions Inc SWKS reported a Q3 EPS of $1.34 vs. $1.28, prompting analysts to conclude that their assumption was right about the key Apple Inc. AAPL suppliers. Apple expert Sean Udall is among those who believed that if Skyworks, Qorvo Inc QRVO and NXP Semiconductors NV NXPI performed as well as Cirrus Logic, Inc. CRUS, Apple would rebound. "Skyworks' numbers that have come up validates, again, there is a fundamental, inherent strength in Apple's core business," Global Equities Research analyst Trip Chowdhry told Benzinga. Udall thought Cirrus' results were more impressive, but there may be a reason for that. "I think the reason the beat isn't bigger is they had guided up already," Udall told Benzinga. "Very solid number. It's not a barn-burner number like Cirrus had, which makes sense." Udall attributed Skyworks' positive results to Apple but indicated that it could have been more successful if it had a smaller mix of Android products. He said this makes it harder for the company to "beat as much as they used to."

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Greater Revenue For Apple?

Chowdhry said that Apple's results were actually better than many investors realized. "They did not say that in the press release, but in the conference call Apple mentioned that their profits would have been nine percent higher than reported on a constant currency basis, the way Google reported and others," Chowdhry explained. "That is, without taking the currency fluctuations, Apple revenue would have been $53.73 billion and the EPS would have been $2.54. And the guidance that they gave, $49 to $51 billion, in constant currency that would have been $53.4 to $55.6 billion. What it means is, Apple's numbers are not bad!" Chowdhry dismissed those who said Apple's results were bad and said that "none of them are accurate." "The numbers you see from the supply chain, on a constant currency basis, those numbers will also be very good," he said. "If you take that at the benchmark, these companies are doing fabulous. On a constant currency basis, Apple's growth rate is more than 30 percent -- Google is only 18." Disclosure: At the time of this writing, Louis Bedigian had no position in the equities mentioned in this report.