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Analysts promote RFMD on Nokia and Motorola ramps

The GaAs chip company looks set to benefit from growing Polaris 3 deployment at Nokia and a return of orders from Motorola.

Two analysts have upgraded their estimates of RF Micro Devices financial performance in 2007, as handset makers ready themselves to battle for a place under the Christmas tree.

Based on information from Asian handset component manufacturers, Craig Ellis of Citigroup raised his revenue outlook for RFMD s fiscal 2008 from $0.96 billion to $1.02 billion on September 23.

Aaron Husock of Morgan Stanley followed suit on September 25, raising his fiscal 2008 revenue estimate from $0.97 billion to $0.99 billion on the back of an extensive Asian tour. Both Husock and Ellis also saw the additional sales contributing to gains in profits.

Husock, usually downbeat on RFMD s prospects, emphasized the potential benefits arising from the uptake of the PA maker s Polaris 3 front-end package by market-leaders Nokia.

“We believe RFMD is preparing for a significantly larger ramp of its Polaris 3 transceiver at Nokia than the consensus expects,” he commented.

“Specifically, it appears that RFMD could ship more than 15 million transceiver units to Nokia in [the second quarter of calendar 2008], the first quarter of full volume.”

The impact of returning Motorola business was downplayed by Husock, who commented that Morgan Stanley saw the handset company recovering more slowly than expected.

Ellis, by contrast, predicted that a rebound in demand from Motorola would be the driving force behind his increased estimate. He is also confident that RFMD s recent acquisition of Sirenza Microdevices will quickly be financially beneficial.

In March, the end of its fiscal year, RFMD recorded revenues of $1.02 billion for 2007, comparing favorably with the estimates of Husock and Ellis given the drop-off in business from Motorola.

Skyworks alse received upgraded estimates from Husock on the basis of increased component orders placed by Samsung, Sony-Ericsson and Chinese OEMs.

Traditionally Husock favors Skyworks long-term prospects over RFMD s, as handset companies move towards single-chip PA solutions embodied in Skyworks BiFET devices.

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