You don't just want a blowout; you want a roadmap to further blowouts, and that's exactly what Skyworks Solutions (SWKS) gave you last night.
If you don't know Skyworks, it's one of a group of semiconductor companies that got pigeon-holed as helpless, but grateful Apple (AAPL) suppliers like Avago, Texas Instruments (TXN) , NXP Semiconductors (NXPI) , Qualcomm (QCOM) , Cirrus Logic (CRUS) and Qorvo (QRVO) .
Now, Texas Instruments was always the paradigm here -- a company that had a substantial Apple business, but never enough for it to be a be all and end all. I always felt that should be the goal of all of these companies; just make Apple -- a component of the Action Alerts PLUS charity portfolio -- part of the pastiche for heaven's sake, not the pastiche.
Then, Avago, when it acquired Broadcom (AVGO) and changed its name to the latter, grew out of the Apple slavery trade. Qualcomm, of late on fire for using alleged monopoly power to make Apple bend to its wishes, decided to buy NXP to get more into the integrated car.
That spread between the $110 that you are supposed to get with Qualcomm's offer and where it is now is a bit disconcerting. But the diversification will work. Cirrus has so much of Apple's business that I don't even know what it can do other than ride the tiger. Qorvo's trying, but it still needs more diversification.
And then there's Skyworks, which has been the most aggressive at winning more and more Apple business and has therefore become a pure derivative of Apple.
Until this quarter. There's enough non-Apple business, enough business involving mobile connectivity away from Apple, and enough of a roadmap of the future toward 5G, which will be so much faster than what we have now, that you can see why the stock's soaring.
Rather than saying how much a "large customer" might need from Skyworks -- because you aren't supposed to mention Apple's name on any call or risk losing the business -- Skyworks talked about how all devices need its chips if they want to run Facebook (FB) , Netflix (NFLX) , Uber, YouTube, Spotify and Waze.
Basically, as CEO Liam Griffin pointed out in what was a pretty electric conference call, if you want "ultrafast, low latency, highly secure and efficient connections as well as location based services," you need Skyworks chips in that device, whether it be a cellphone, the connected home with a service you talk to (think Amazon (AMZN) and Google (GOOGL) machines), Wifi anywhere, or a connected car.
And it's only going to get better as we await 5g, which will allow you to download a full length movie in seconds as opposed to the current iteration, 4g, which can download a movie in minutes and 3G, which took a day.
Yep; this quarter was all about what the company called "growth and success outside our largest customer", which is music to the analysts' ears, especially when the company told you inventories were lean and it's happy with the current state of both the connected and the mobile world demand.
Now, they haven't lost any Apple, and it's still 40% of their business, but when you hear the streak of names away from Apple, including the clear number two, Huawei, you just get a level of comfort that allows you to pay more for the $6.20 you might be looking for in 2017.
How much? Certainly more than the 12 PE the stock has now. Which is why Skyworks can resume the climb it had before the street feared too much Apple hostage taking. Perhaps even the run back to the $100s, from the $70s, where it was just two years ago.
