Skyworks bought Qorvo. Why does the first forecast point lower?

Skyworks expects a split start to its first quarter with Qorvo. The radio-frequency chipmaker's December outlook implies modest growth at the old Skyworks business, while the acquired Qorvo business is expected to shrink even after adjusting for an extra reporting week.

The companies completed their combination on October 5. The first combined revenue forecast is $1.80 billion to $1.90 billion, with a midpoint of $1.85 billion. At that midpoint, management expects approximately $1.07 billion from legacy Skyworks and $780 million from legacy Qorvo.

The decline sits in one part of the combination

Research by Ticker Byline shows that the midpoint implies about 2% growth at legacy Skyworks, versus its approximately $1.046 billion September-quarter revenue. Qorvo's comparison needs another step.

Qorvo reported $937 million for its September fiscal quarter, including approximately $70 million from an extra week. Removing that contribution gives an estimated $867 million comparison. The $780 million forecast is about 10% lower.

Qorvo's roughly $87 million decline is partly offset by approximately $24 million of Skyworks growth. The combined forecast is about 3% below the week-adjusted comparison. The baseline is a sum of two companies' separate reporting periods, rather than an audited combined quarter.

Management expects smartphone revenue to fall in the low teens sequentially, citing seasonality, Android-market softness and the extra week. It expects Diversified Growth Markets, including data-center and defense business, to grow in the low single digits and represent more than 40% of sales.

A clearer timetable for savings

Skyworks now expects approximately $150 million of operating-expense synergies during fiscal 2027, weighted toward the second half. It expects to exit the year at a $250 million to $300 million annualized savings rate.

The larger target of at least $500 million annually within 24 to 36 months of closing is unchanged from the original merger announcement. The first-year expense benefit and the eventual annualized target measure different stages of integration.

The combined December adjusted EPS forecast is $1.25, using approximately 241 million diluted shares and including about $50 million of other expense, primarily acquisition-financing interest.

September's reported financial results remain standalone Skyworks because the merger closed afterward. Revenue of $1.046 billion and adjusted EPS of $1.28 broadly met July's guidance. The Skyworks company profile separates those pre-merger accounts from the new combined outlook and financing.