Yahoo Finance Skyworks (SWKS) Buys Avnera for $405M, Strengthens Portfolio
Skyworks Solutions, Inc. SWKS recently concluded the acquisition of Avnera Corporation for $405 million in cash. The company had entered into a definitive agreement to acquire Avnera on Aug 6, 2018.
The buyout gives Skyworks access to robust analog/mixed signal voice, audio and speech processing engines. Avnera acquisition is expected to extend the company’s reach across high-growth markets, comprising Internet of Things (IoT), Artificial Intelligence (AI), Automotive, Smart Home and Enterprise.
Skyworks anticipates the deal to expand gross margin and be accretive to earnings per share, immediately. The company also envisions total addressable market (“TAM”) to expand by more than $5 billion, post-acquisition.
Skyworks Solutions, Inc. Price
Skyworks Solutions, Inc. Price | Skyworks Solutions, Inc. Quote
Avnera Buyout a Smart Move
Avnera is a fabless analog semiconductor provider. The company’s forte lies in delivering market-specific low-power Analog System-on-Chips (ASoC).
The company’s ASoCs boast of considerably high levels of integration, consequentlyimproving time-to-market. Avnera’s more than 100 issued and pending patents highlight its innovation capabilities.
Avnera’s customer base includes the likes ofJBL, Panasonic, Harman, Philips, Samsung, Sony, Vizio, Sennheiser, and Yamaha, among others.
With this acquisition, Skyworks intents to leverage Avnera’s product portfolio and systems expertise in order to strengthen foothold in automotive, industrial, automation and high-end consumer markets.
The global System-on-Chip (SoC) market is projected to see a CAGR of 8.1% from 2017 to reach $205.4 billion by 2023, per AlliedMarketResearch data. This strengthens Skyworks’ growth prospects post Avnera buyout.
Cash Position
As of Jun 29, 2018, Skyworks had cash & cash equivalents of $1.65 billion, down from $1.88 billion as of Mar 30, 2018. In the third quarter of fiscal 2018, cash flow from operating activities was $258 million, down from $434.2 million in the previous quarter.
To Conclude
Skyworks is benefiting from its portfolio strength, particularly in the 5G applications and IoT market. The lifting of ban on ZTE by the United States is also a positive, although the contribution from the Chinese original equipment manufacturer (OEM) is expected to be minimal in the near term.
Further, Skyworks continues to win content at mobile and OEMs like Huawei, Samsung, Oppo, Vivo, LG and Nokia, which is a catalyst for the company
However, weakness in China remains a headwind.
Zacks Rank & Other Stocks to Consider
Skyworks carries a Zacks Rank #2 (Buy).
Mellanox MLNX, Microsoft Corporation MSFT and Logitech International S.A. LOGI are other stocks worth considering in the same sector. All the stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Mellanox, Microsoft and Logitech have a long-term earnings growth rate of 15%, 12.3% and 8%, respectively.
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