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4 December 2008


RFMD lowers revenue guidance and announces cost cutting

To reflect broad-based, reduced demand in its end markets, RF Micro Devices Inc of Greensboro, NC, USA has updated its guidance for fiscal third-quarter 2009 (to end-December 2008) to 15-20% below the low-end of the $253-271m guidance it provided on 28 October (i.e. $202-215m, down a massive 21-26% on last quarter's $271.7m and down similarly on $268.2m a year ago).

Despite the projected reduction in revenue, RFMD continues to expect gross margin to improve sequentially and to achieve positive diluted earnings per share (EPS) on a non-GAAP basis. The original guidance forecasted diluted EPS of $0.00-0.02 (GAAP) and and $0.05-0.07 (non-GAAP).

RFMD says that it expects to strengthen its balance sheet and improve its capital structure during the December quarter. Quarterly cash flow from operations should increase significantly on the September quarter, with minimal capital expenditures anticipated. Additionally, RFMD has purchased about $23m par value, or 10%, of its 2010 convertible debt and continues to have about $50m available and authorized for common stock repurchases under its existing share repurchase program. The firm says that it may make additional purchases of its convertible debt or common stock from time to time in the open market in accordance with applicable regulations.

“In light of the reduced demand environment, we have taken decisive and immediate actions to maximize cash flow by reducing costs, working capital and capital expenditures,” says president & CEO Bob Bruggeworth. “These cost-cutting measures have begun to take effect, and we expect to derive the full benefit of these measures during the March 2009 quarter,” he adds. “We are sizing our operating model to match our revenue expectations.” RFMD continues to expect $80-120m in free cash flow (cash flow from operations less capital expenditures) in fiscal 2010.

Just at the beginning of this week, fellow RFIC maker Skyworks Solutions Inc of Woburn, MA, USA also lowered its revenue guidance for the December quarter, from $240m (given on 6 November) to just $210-215m (down 8-10% on last quarter’s $232.6m) due to “weakness in the handset and broader analog markets”.

See related items:

Skyworks lowers quarterly revenue guidance from $240m to $210-215m

RFMD improves operating income after restructuring

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