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2 November 2012

RFMD’s revenue up 3.5% on last quarter, but 14% down year-on-year 

Radio-frequency components and compound semiconductor company RF Micro Devices Inc of Greensboro, NC, USA has reported some positive financial results for its fiscal second-quarter 2013 (ended 29 September 2012).

Fiscal Q2/2012 Q3/2012 Q4/2012 Q1/2013 Q2/2013
Revenue $243.8m $225.4m $187.9m

Revenue increased sequentially by 3.5% to $209.7m (versus $202.7m last quarter). The company attributed this growth to increased sales by RFMD's Cellular Products Group (CPG), “reflecting diversification, category expansion, and content gains in 3G/4G components”. However, year-on-year quarter revenue was down by 14%, from $243.8m.

On a GAAP basis, gross margin totaled 31.7%, operating loss was $10.2m, and net loss was $16.5m ($0.06 per diluted share). On a non-GAAP basis, gross margin rose 110 basis points sequentially to 35.2%, operating income totaled $9.2m, and net income was $7.8m ($0.03 per diluted share).

Strategic highlights of the quarter included the following:

  • RFMD continued to increase its content in the world's leading smart devices and reference designs;  
  • CPG commenced volume shipments of 3G/4G LTE components to multiple customers in support of multiple flagship smartphones;  
  • CPG increased sales of 3G/4G components to greater than 75% of revenue (up from 66% last quarter);  
  • RFMD's Multi-Market Products Group (MPG) grew WiFi revenue more than 15% quarter-over-quarter;  
  • MPG commenced production shipments of 802.11n WiFi front ends in support of multiple applications, including smartphones, tablets, enterprise equipment, and consumer products;  
  • MPG captured a 802.11ac WiFi front-end design win in support of a leading smartphone maker.  

Considering its financial prospects, RFMD said it expects further sequential revenue growth in the fiscal Q3 December quarter (up 17% to $245m), reflecting its continued diversification, category expansion, and content gains, “combined with the benefit of multiple new customer product ramps”.

“Our September 2012 quarterly results highlight our product and technology leadership and the strength of our multi-pronged growth strategy of diversification, category expansion, and content gains,” said president & CEO Bob Bruggeworth. “Of note, sales of RFMD’s 3G/4G cellular components grew to more than 75% of total CPG revenue in the September quarter, led by PowerSmart, our ultra-high-efficiency 3G/4G power amplifiers (PAs), and our new switch-based solutions in support of flagship LTE devices,” he added.

"In the December 2012 quarter, we expect to see robust sequential growth in 3G/4G components across a broad set of products and customers,” continued Bruggeworth. “We are increasing our content in the world’s leading baseband reference designs and smart devices, and we expect to outpace the rate of growth of our underlying markets, beginning in the December quarter and continuing into calendar 2013.”

Dean Priddy, chief financial officer & VP of administration, added, "RFMD’s key R&D investments are beginning to produce share gains and broad-based revenue growth. With this growth, we have begun to see robust leverage in RFMD’s financial model. In the December quarter, we plan to grow revenue faster than our underlying markets, and we anticipate our sequential growth in operating income will substantially outpace our sequential growth in revenue. In addition, we anticipate continued improvement in multiple balance sheet metrics, supported by a substantial increase in free cash flow."

Following its formal presentations of results and forecast, the RFMD executive team took questions from press and analysts. Bruggeworth described aspects of the company’s plans for product development and diversification, while Norman Hilgendorf, VP corporate development & MPG president, considered likely changes in the mobile marketplace that could be beneficial for the company’s portfolio.

“The company’s commitment to product leadership is the engine behind our diversification, category expansion and content gains,” said Bruggeworth. “It brought us PowerSmart and our new PowerSmart TD for China Mobile, as well as our ultra-high-efficiency PAs and our expanding portfolio of switches and antenna control solutions,” he added.

“Soon, we'll introduce exciting new products that leverage our investment and advanced RF power management schemes, like envelope tracking, and in important new industry requirements, like carrier aggregation. In both cases, this will be highly differentiated RF front-end solutions derived from years of research on system architectures and featuring the best available process technologies,” Bruggeworth continued.

“In the meantime, our guidance for the December quarter reflects our expectations for continued diversification, category expansion and content gains, combined with the benefit of multiple new customer product launches.”

Hilgendorf added some remarks to the previous statements on business outlook, “For Wi-Fi, we're seeing increased mobile data rates are driving the need for higher performance, especially in really small spaces such as handsets, tablets and other equipments. So this is driving significant activity throughout the industry today. RFMD has the right products. We're working with the right channel partners. We have the manufacturing scale. And so [our] 802.11n shipments are strong and growing, and we see the 802.11ac [marketplace] coming around the bend.”

See related items:

RFMD’s quarterly revenue and margins grow, driven by diversified markets

RFMD’s quarterly revenue falls 16.6% to $187.9m

RFMD’s quarterly revenue falls 19% year-on-year to $225.4m

RFMD’s quarterly revenue rises 14% to $243.8m

RFMD returns to sequential revenue growth

Tags: RFMD


Author: Matthew Peach, Contributing Editor

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