Skyworks Solutions Inc. (SWKS) yesterday raised its guidance for the fourth quarter of fiscal 2009, driven by broad-based improvements in order demand.

Massachusetts-based Skyworks designs, manufactures and markets a broad range of high-performance analog and mixed signal semiconductors that enable wireless connectivity.

The company now expects revenues to come between $220 million and $225 million, up from the previous estimate of $210.3 million. Management has stated that multiple new program ramp-ups coupled with strong operational execution are contributing to the better-than-expected top-line and bottom-line growth.

EPS (excluding one time charges/gains) is forecasted around 21 – 22 cents, up from the earlier projection of 19 cents.

The gradual and better-than-expected recovery in the semiconductor space has propelled most players to raise their quarterly projections driven by improving demand.

Earlier in the day, top player Texas Instruments (TXN) upgraded its forecast for the third quarter driven by unpredicted demand in all segments, particularly the Analog segment. The wireless segment is also expected to grow, albeit at a slower pace. The company now expects revenues between $2.73 billion and $2.87 billion compared to the earlier projection of revenues between $2.50 billion and $2.80 billion.

Most companies had expected markets to improve in the second half of 2009 after a dismal second half of 2008, followed by months of inventory correction. But it seems that demand is improving at a better pace than expected, leading to increased projections by most chip-makers.

Most recently, programmable chip-maker Altera Corporation (ALTR) raised its revenue guidance for the third quarter, driven by improving market conditions.

Microchip Technologies Incorporated (MCHP) also upgraded its quarterly revenue guidance pushed by good backlog and strong bookings and sales activities in the first two months for the quarter.

We remain encouraged by Skyworks’ recent performance and guidance and the company seems to be well positioned to capitalize on the eventual recovery in the handsets market. Our long-term recommendation for Skyworks is OUTPERFORM.
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