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7 December 2006


WJ lowers Q4 revenue guidance from $12-12.5m to $10.8-11.3m

WJ Communications Inc of San Jose, CA, USA, which provides RFICs and modules for the wireless infrastructure and RFID reader markets, has lowered its early November’s fourth-quarter 2006 revenue guidance from $12-12.5m to $10.8-11.3m, and for full-year 2006 from $49.5-50m to $48.3-48.8m.

“We are experiencing a slowdown in sales through our distribution channel beyond the anticipated softening in the Korean repeater business that we discussed during the third quarter’s conference call and lower than expected results in the RFID market due to the ongoing unpredictability of its growth trends,” says president and CEO Bruce Diamond. “In addition, the overall market demand appears to be down as we see some weakness in a few of our original equipment manufacturers which is expected to result in a lower level of revenue booked and shipped during the quarter than anticipated at the time we provided guidance,” he adds. “However, we are confident in our long-term business model and our new product introductions are on track to address the growth opportunities in our target markets.”

WJ now expects to close its 4” GaAs wafer fab in Milpitas, CA by mid-January (rather than just ‘during first-quarter 2007’). WJ agreed in March 2006 to use pure-play III-V wafer foundry Global Communication Semiconductors Inc of Torrance, CA as a second source of GaAs and InGaP HBT wafers (starting in July), then decided at the beginning of November to go completely fabless.

The restructuring charge is expected to be reduced from the initial estimate of $1.4-1.2m to $1m, plus $200,000 charged to gross margin in Q4 (contributing to guidance for Q4 gross margin being lowered from 55-56% to 48-50%). WJ continues to expect savings of $1-1.25m per quarter upon completion of the restructuring.

See related item:

WJ reports sales up 57% year-on-year and plans to go fabless; launches first 28V InGaP HBTs for 3G