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11 January 2008


RFMD reports late-quarter drop in demand

At this week’s 10th Annual Needham Growth Stock Conference, RF Micro Devices Inc of Greensboro, NC, USA said that, for its fiscal third-quarter (ended 29 December 2007) it now expects revenue of about $268m.

This includes a partial quarter of revenue from Sirenza Microdevices Inc (acquired on 13 November). Excluding Sirenza, revenue from RFMD’s continuing operations should be about $254m, down slightly from fiscal Q2’s $255.8m and down on the guidance it gave in late October of 4-9% growth to $265-280m.

RFMD says that late in the December quarter it experienced reduced demand from customers in Asia and from its high concentration of top-tier customers that use inventory hubs. Also, demand softened in the infrastructure and broadband/consumer markets. “RFMD entered the December 2007 quarter prepared to meet strong customer backlog that subsequently weakened late in the quarter,” says president and CEO Bob Bruggeworth.

Also, RFMD now expects non-GAAP earnings per share of $0.06-0.07, compared to its previous guidance of $0.08-0.09.

“Despite the demand weakness, we made progress on several fronts to improve our financial performance,” Bruggeworth adds. “Specifically, product yields increased on our Polaris 3 RF system in the December quarter, and we expect that trend to continue in the March quarter.” Also, the integration of Sirenza is in the final phase, and RFMD expects earnings accretion starting in the March quarter.

For the March 2008 quarter, RFMD currently expects revenues for its Cellular Handset Products Group (CPG) to be down quarter-over-quarter, offset partially by its Multi-Market Products Group (MPG), which is expected to be flat to up. However, the firm believes that the reduction in demand is temporary.

In particular, RFMD continues to see strong demand for its 3G multi-mode front-ends and 802.11 products. “In the March 2008 quarter, we are seeing the product mix in MPG trending toward more favorable gross margins, and we anticipate quarter-over-quarter growth for CPG in Polaris 3 revenue as the high-volume ramp of this product continues,” says Bruggeworth. RFMD therefore expects a return to overall growth in fiscal 2009 (from April 2008).

In addition, RFMD believes that its pending acquisition of Filtronic Compound Semiconductor Ltd in Newton Aycliffe, UK will reduce its GaAs pHEMT sourcing costs significantly and ultimately be accretive to margins while adding to MPG revenue and total RFMD earnings.

RFMD will release complete fiscal third-quarter 2008 results on 31 January.

See related items:

Filtronic sells Compound business

RFMD completes Sirenza acquisition and launches Multi-Market Products Group

RFMD’s 21% sequential growth driven by Polaris 3 shipments to Nokia and Motorola recovery

RFMD expands to accommodate cellular and multi-market demand

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