Polaris 3 to propel RFMD out of sales slump
Despite recording an 18 percent fall in revenue in the quarter ended on June 30, RF Microdevices is confidently forecasting operational profits for the upcoming three months.
Sales fell for the second successive quarter, to $212 million in comparison to $257 million in the previous quarter, mostly due to a $50 million downturn in orders from Motorola.
The Greensboro, North Carolina, radio chip and system maker was able to report a net income of $25.3 million, thanks to benefits from tax allowances compensating for its $1.8 million operating loss.
RFMD used its results as an opportunity to herald the start of full production for the Polaris 3 front-end module and highlight the potential of the strategic supply agreement it has earned them with Nokia.
“This is a breakthrough product that delivers meaningful customer benefits - its significance to RFMD cannot be overstated,” commented Bob Bruggeworth, the company s CEO.
Including Polaris 3, RFMD already has orders booked which will lead to 50 percent sequential growth in its WCDMA business, and orders for its WLAN front ends match this figure.
Global position
The company is also expecting to push its GPS provision for handsets as a capability that can be layered onto its Polaris modules.
Having experienced higher-than-expected demand to date, RFMD announced the first official selection of the company's GPS system by a leading handset maker.
“RFMD is now focussed on GPS in handsets,” Bruggeworth emphasised.
Looking even further into the future, Bruggeworth said that customer interest in its Lodestar solution for long-term evolution of 3G systems (LTE) was strong.
Commenting on moves to in-source its PHEMT switching in recent months, RFMD confirmed it was cheaper to perform the manufacturing itself, although the change will only be completed over the course of several quarters.
Aaron Husock, of analysts Morgan Stanley, said that RFMD s initial prospects looked good in light of recent achievements, although he predicts that single-chip solutions will ultimately eclipse the multi-chip package of Polaris 3.
“RFMD should post strong growth in its PA business driven by WCDMA uptake and more integrated front end modules,” Husock conceded.
Understandably, the company was more positive, predicting revenue would grow between 9 and 16 percent over the coming quarter.
“We expect to significantly outpace the handset market in the second half of 2007,” Bruggeworth said.
“We are back on a positive growth trajectory, we will extend our leadership in RF, and demonstrate once again that industry leaders can grow at greater than industry growth rates.”
