Analog semiconductor manufacturer Skyworks Solutions Inc. (SWKS) unveiled a new stock repurchase program under which it plans to buy back up to $300 million of its common stock. The company???s strong financial position and healthy cash flow generating capability enables it to undertake such shareholder friendly moves.
The new buyback program, which is valid till Nov 11, 2016, completely replaces the $250 million stock repurchase program, which was approved by the Board in Jul 2013, and had $63.9 million remaining at its disposal.
Under the repurchase program, Skyworks plans to buy shares through open-market transactions or in privately negotiated transactions. The stock buyback will be funded from available working capital funds and the repurchased stock will be accessible for use in relation to its stock plans and for other corporate purposes. As of Oct 3, 2014, the company???s cash and cash equivalents amounted to about $805.8 million. The company is debt-free as well, which indicates a strong financial position.
In the recent quarter, the company returned over $200 million to shareholders by way of share repurchases and dividend distribution. This accounted for about 35% of the company???s free cash flow of $560 million. Skyworks repurchased 875,000 shares of its common stock during the quarter.
The company???s repurchasing activity further boosted its impressive bottom line last quarter. In its fourth-quarter fiscal 2014 financial results, adjusted earnings came in at $1.12 per share, with a striking 75% year-over-year increase. Revenues registered strong growth as well and came in at $718.2 million, jumping 51% year over year.
Skyworks has a strong foothold in mobile internet and analog components markets. Skyworks has a diversified customer base and its products have wide-ranging applications. It supplies chips to??General Motors Company??(GM) for collision-avoidance systems and Rockwell Collins Inc. (COL) uses them for GPS applications to support avionics. General Electric??Company (GE) uses its chips in thermostat and lighting platforms.
The company is well positioned to drive growth as it enjoys strong end-market diversification and healthy demand for high-performance wireless solutions, especially in new markets. Moreover, robust industry outlook and increasing proliferation of the Internet of Things will prove to be formidable tailwinds for the company, going forward.
Skyworks presently sports a Zacks Rank #1 (Strong Buy).
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