Skyworks' Acquisition of Qorvo: First Quarter Guidance Down 7% QoQ, Synergies to Materialize in Two and a Half Years
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Skyworks' first combined guidance after closing the Qorvo merger shows revenue down roughly 7% sequentially and EPS actually lower than pre-merger levels, with the full $500 million synergy target not due until two to three years out — shares fell about 16% after hours.
What did the last standalone report card look like?
Fiscal Q4 standalone revenue came in at $1.046 billion, down about 5% year over year; full-year revenue was $3.96 billion versus $4.09 billion.
GAAP diluted EPS collapsed to $0.15 from $0.94 a year ago, dragged down by $82.1 million in restructuring, impairment, and deal-related charges.
This means → the non-GAAP EPS of $1.28 is the real operating baseline, but even that trails last year's $1.76 — margins were already sliding before the merger closed.
Non-GAAP gross margin 44.4%, operating margin 21.7%, each roughly two percentage points below the prior year; free cash flow flipped to negative $61 million, though $2.6 billion in cash on hand provides a cushion.
Why did the market reject the first combined-quarter guidance?
Combined Q1 FY2027 revenue guidance: $1.8–1.9 billion, midpoint roughly $1.85 billion — legacy Skyworks contributing ~$1.07 billion, legacy Qorvo ~$780 million.
In plain terms = the two companies together did about $1.98 billion last quarter; the new guide is $1.85 billion — a sequential drop of roughly 7%.
Stripping out the extra week in Qorvo's fiscal calendar — worth about $70 million — the decline narrows to roughly 3%. But non-GAAP EPS guidance of $1.25 is still below Skyworks' standalone $1.28.
This means → merger-financing interest of roughly $50 million per quarter is eating directly into profit. The dilution arrived before the synergies did, and that is the core reason shares dropped 16% after hours.
Where are mobile and diversified businesses heading?
Smartphone revenue is expected to decline low double digits sequentially, driven by seasonality and a soft Android market.
Diversified growth markets — data centers plus defense — are still growing low single digits sequentially after adjusting for the extra week, and high single to low double digits year over year on a combined basis.
This reflects the company's pivot from mobile RF toward AI data centers, defense and aerospace, and automotive — diversified revenue will exceed 40% of total sales.
When does the $500 million synergy target actually land?
Management expects roughly $150 million in operating-expense synergies within FY2027, weighted to the second half.
By FY2027's end, the annualized run-rate target is $250–300 million; the full $500 million-plus annual cost synergy requires two to three years post-close.
In plain terms = the market can see $150 million today; the remaining $350 million rests entirely on management's promise — whether that synergy story delivers on time is the key proof point over the coming quarters.
Any good news from ratings and new orders?
Moody's upgraded the company to investment grade at Baa3; Fitch affirmed BBB+ and shifted the outlook from "negative" to "stable."
This means → credit markets view post-merger debt serviceability as manageable; funding costs should not deteriorate further in the near term.
On the business side, the company won an AI data-center network-timing design — precision clock chips that synchronize signals inside data centers — and began shipping high-performance timing silicon to a leading AI cloud provider; in automotive, it secured a gate-driver order for EV traction inverters from a German luxury automaker. New growth vectors are materializing, but still need to scale.
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