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News Article

RFMD revenues slump to $213.3 million

Apart from seasonality, the firm’s financial results were adversely affected by declining revenue at RFMD's largest customer.

RF Micro Devices, a designer and manufacturer of high-performance radio frequency components and compound semiconductor technologies, has reported financial results for its fiscal 2011 fourth quarter, ended April 2, 2011.

 

 



RFMD's March 2011 quarterly revenue declined approximately 18% year-over-year and approximately 23% sequentially to $213.3 million, primarily as a result of seasonality and declining revenue at RFMD's largest customer. On a GAAP basis, gross margin equalled 35.4%, quarterly operating income totalled $13.2 million, and quarterly net income was $24.1 million, or $0.08 per diluted share. 

During the quarter, RFMD generated approximately $31.4 million in free cash flow, retired $35.5 million principal amount of convertible debt and repurchased approximately 1.7 million shares of common stock.

RFMD Strategic Highlights:

    * RFMD's PowerSmart power platforms recognized as the industry's most innovative device of 2011 by Compound Semiconductor magazine

    * RFMD's Cellular Products Group (CPG) commenced volume production of new, higher margin 3G/4G solutions, including RFMD's PowerSmart power platforms and RFMD's RF724x family of ultra high efficiency 3G/4G PAs

    * CPG secured multiple design wins for high-performance, silicon-based switches and switch filter modules across the world's leading smartphone and tablet manufacturers

    * RFMD's Multi-Market Products Group (MPG) commenced production of new GaN-based products for high-power military radar and CATV applications

    * MPG secured major design wins across multiple growth markets, including wireless infrastructure, Smart Energy, high-performance WiFi for smartphones and tablets, and point-to-point radio for cellular backhaul

 

Business Outlook:

RFMD expects June quarterly revenue to be flat to down 5% sequentially, as 8-12% growth in RFMD's core business is offset by declining sales of legacy products. The company expects to further diversify its revenue base, with its largest customer approaching 15% of revenue in the June 2011 quarter.

RFMD anticipates its transceiver products will be immaterial to financial results in the June 2011 quarter and thereafter and expects June quarterly gross margin to increase approximately 100 basis points, driven by continued customer diversification and improved product mix. The firm expects to return to sequential growth beginning in the September quarter.

Bob Bruggeworth, president and chief executive officer of RFMD, said, "RFMD's strategic restructuring, announced three years ago, is now complete and driving diversified growth opportunities for RFMD. Sales in our Multi-Market Products Group grew by more than 30% in fiscal 2011 over fiscal 2010 and in our Cellular Products Group sales to customers outside our largest customer grew by more than 50% during the same period. In the June quarter we anticipate transceiver products will be immaterial to financial results and we expect to achieve our most diverse quarter of customer mix in RFMD's history as a public company.”

"Looking forward, we expect RFMD will take full advantage of global secular growth trends and grow faster than our core markets. This will enable broad improvement in our financials, supporting margin expansion, operating leverage, earnings growth, continued strong free cash flow, and superior return on invested capital," he continued.

Dean Priddy, CFO and vice president of administration of RFMD, said, "RFMD is executing on its growth strategy. Revenue in our core business, which excludes transceiver revenue, is expected to grow approximately 8-12% sequentially in the June quarter, driven by exciting new product cycles and technologies. This should drive gross margin expansion beginning in the June quarter.

"With all major growth drivers intact, we have the confidence to actively put RFMD's superior free cash flow to use. During the March quarter, we repurchased approximately 1.7 million shares of common stock and retired $35.5 million principal amount of convertible debt due in 2012. In addition to the ongoing optimisation of our capital structure, RFMD will continue investing in the R&D and customer-facing resources necessary to outpace the growth rate in our markets."               

RFMDconducted a conference call discussing the recent results and business outlook.   A telephone playback of the conference call is available by dialling 303-590-3030 and using pass code 4432787#.

              
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