Skyworks guides the Qorvo business it bought 10% below its September run-rate, on $2.47 billion of debt
The first combined forecast values the Qorvo business Skyworks bought at 10% less than it really ran in September, once an extra week is stripped out, and the balance sheet behind it now carries $2.47 billion of debt.
Vincent Jiang · 2 min read
Skyworks−0.44% — Skyworks, down 0.44 percent today closed its purchase of Qorvo+1.75% — Qorvo, up 1.75 percent as of its last quote on October 5 2. Eight days into the new fiscal year, the first combined forecast put a number on what the combined radio-frequency chipmaker will earn: $1.80 billion to $1.90 billion for the December quarter. 2
The half that is shrinking
The $1.85 billion midpoint splits into about $1.07 billion from legacy Skyworks and $780 million from legacy Qorvo. 24 That Qorvo figure is the story. Qorvo did $937 million in its September quarter, but roughly $70 million of that was an extra week in the calendar 3. Strip the week out and the guide sits about 10% below the real run-rate 3. CFO Philip Carter was blunter: Android revenue inside the acquired business fell more than 20% sequentially, and should be under 10% of the smartphone business by fiscal 2027. 3
Skyworks guides Qorvo's business down while its own edges up
The acquired half is guided 10% lower while the buyer's half grows 2%
- September quarter
- December guide
- Estimate
Data
| September quarter | December guide | |
|---|---|---|
| Legacy Skyworks | 1,046$M | 1,070$M |
| Legacy Qorvo (ex extra week) (estimate) | 867$M | 780$M |
Legacy Skyworks, by contrast, is guided up about 2% 4. The combination is roughly 3% smaller than the week-adjusted September base. 4 The stock fell 5.19% to $80.97 on November 4; Goldman Sachs resumed coverage at Sell with a $78 target, citing smartphone dependence. 56
Who pays, and who holds the paper
Qorvo no longer trades. Its former shareholders now hold Skyworks stock, and the balance sheet behind it carries $2.47 billion of debt against $2.61 billion of cash, net cash down to $133 million from $393 million, and free cash flow of minus $61.0 million in the quarter 2. No dividend was paid, against $105.6 million a year earlier. 2 S&P affirmed BBB- on November 5 with stable outlook, mid-1x pro forma leverage, and a downgrade trigger above 2x. 1
CEO Phil Brace gave the counterweight: diversified growth markets, the defense and data-center piece that grew 12% to about $2.9 billion, is supply constrained, and $500 million or more of annual cost synergies are targeted 3. But the largest customer, Apple−0.14% — Apple, down 0.14 percent today at about 62% of September revenue and over half pro forma, "is not going to just hand us business because all of a sudden we're combined." 3 S&P calls the deal a defensive move against Broadcom−0.17% — Broadcom, down 0.17 percent today and Qualcomm+4.25% — Qualcomm, up 4.25 percent today. 1
The February test
From the February call, Skyworks reports smartphone against diversified growth markets only. That split is where holders of the swapped paper will first see which half of the company they own. 3
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