CSFB on RFMD
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RF Micro Devices (RFMD, $138 15/16, Strong Buy, Cap: $12 B)
QCOM Design Win and Strong Outlook Prompt Estimate and Price Target Increases
ú RFMD and QCOM announced an alliance whereby RFMD will design and manufacture power amplifiers with QCOM name on them, enabling QCOM to offer an all-in-one CDMA solution to its customers. We referred to this agreement in several previous notes dating back to October 1999.
ú While much of this transaction was factored into our model, RFMD management is feeling more comfortable with forward guidance, while still conservatively discounting the potential, transitory effects of ramping a high volume customer, a new fab, and new product modules.
ú In addition, our checks confirm that even with limited Korean visibility, RFMD is experiencing stronger than expected demand this quarter, driven by Nokia (especially TDMA and GSM segments), Bosch, Sanyo, and NEC. We also believe that ERICY has begun volume shipments, slightly ahead of our model.
ú We are increasing our revenue projections for FY2001 to $431 MM (from $422 MM); however our EPS estimate remains $0.84 as we conservatively assume slight margin declines in 2H2001 owing to new fab and module product ramps.
We introduce FY2002 EPS of $1.22, based off of $636 MM in sales. Our new price target is $160. |
