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RFMD forecasts year-end rise in handset sales

RFMD expects that its revenue for the September quarter will be broadly flat compared with the June quarter, but that handset unit shipments will increase in the last quarter of the year.
RF Micro Devices, a supplier of RFICs for wireless communications, has reported revenue of $165.8 million for its fiscal 2005 first quarter ended June 30, 2004. The figure represents a 1.4% sequential increase from the previous quarter and a 26% year-on-year increase versus $131.5 million for the June 2003 quarter.

The company s gross profit was $64.9 million, up 6.5% sequentially and up 57.3% year-on-year. Net income for the quarter was $3.0 million, or $0.02 per diluted share, compared with a net loss of $8.2 million, or $0.04 per diluted share, in the June 2003 quarter.

The net income figures above are reported in accordance with US generally accepted accounting principles (GAAP), while RFMD has also started to report non-GAAP, or pro-forma results. These exclude the effect of certain non-recurring and non-cash items, and tend to give a better view of the financial health of ongoing operations.

RFMD s GAAP results for the June 2004 quarter included $9.7 million in expenses, including an in-process R&D charge of approximately $6.2 million related to the acquisition of SiliconWave. After excluding these items, pro-forma net income was $12.7 million, or $0.06 per diluted share.

Outlook

RF Micro Devices anticipates the worldwide handset market is on track to sell more than 600 million units in calendar year 2004, reflecting solid, double-digit unit growth over 2003. Unit shipment volumes in the September quarter are expected to remain approximately level with the June quarter, with sequential unit growth resuming in the December quarter.

The company expects that its revenue for the current quarter ending September 30, 2004 will be at the same level as in the June 2004 quarter. GAAP net income per share is currently expected to be approximately $0.01 to $0.02, and pro forma net income per share is expected to be approximately $0.03 to $0.04.

Bob Bruggeworth, president and CEO, said, "During the June quarter, we believe we gained market share in our core market of power amplifiers. Within the Bluetooth market, order rates were strong, and we expect we are on track to double our Bluetooth revenue this quarter."

"We began production shipments during the June quarter of our Polaris 1 Total Radio GSM/GPRS transceiver. We achieved full type approval (FTA) with our Polaris 2 Total Radio GSM/GPRS/EDGE transceiver with a top-tier handset OEM, and we are currently in the FTA process with another top-tier OEM.

"We remain on schedule to deliver mass production shipments of our Polaris 2 transceiver, totaling more than one million units, in the December quarter. We continue to believe that the market for EDGE handsets is larger than industry experts originally estimated, and we believe our Polaris 2 Total Radio transceiver and power amplifiers for EDGE will gain market share in the December quarter and continue to gain share in calendar year 2005."

Dean Priddy, CFO and VP of administration, said that RFMD had achieved a 180-basis point (1.8%) improvement in gross margin to 39.1% in the June quarter. "This was achieved primarily through yield improvement across our highest volume power amplifier modules," said Priddy. "We have considerable opportunity to continue to expand our margins this fiscal year through ongoing cost savings initiatives, such as continued improvements in manufacturing yields and the ramp of our internal module assembly operations."

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