Component Maker Helps Nokia Rise, Despite WorldCom
By Kenneth Li
Senior Writer
06/26/2002 07:39 PM EDT
Nokia (NOK:NYSE ADR - news - commentary - research - analysis) distinguished itself today as one of the few gainers in a frantic trading session with telecom stocks splattered by WorldCom's (WCOM:Nasdaq - news - commentary - research - analysis) accounting scandal debris.
Investors found some value in Nokia shares, which surged $1.07, or 8.9% to $13.42, a welcome rally to telecom investor diehards. More than 22 million shares changed hands, nearly double its average trading volume.
The market apparently reacted late to news from wireless communications component manufacturer RF Micro Devices (RFMD:Nasdaq - news - commentary - research - analysis).
CFO Dean Pruddy remarked at a Wachovia Securities conference that despite the overall slump in global handset volume, the company plans to achieve a growth in revenues and earnings from its top handset manufacturer customers in its September quarter.
His remarks put to rest for now some concern that handset sales will fall precipitously below even the current round of reduced expectations. Nokia accounted for more than 50% of the company's revenues in the March quarter.
Just over two weeks ago, RF Micro reduced sales and earnings expectations for the June quarter, blaming one handset manufacturer's decision to push back handset shipments for its shortfall. RF Micro told investors it planned to report break-even earnings per share, instead of a 2 to 3 cents profit, on revenues of $98 million to $101 million, instead of the more ambitious $107 million to $110 million range.
The warning, which came in tandem with Intel's (INTC:Nasdaq - news - commentary - research - analysis) shortfall revelations, pulled the entire handset sector down on June 7, which fueled speculation that Nokia planned to reduce sales figures, which it did a couple of days later.
In another surprising nugget of news, RF also said for the first time handset component revenues in the June quarter from Motorola (MOT:NYSE - news - commentary - research - analysis) will make up to or greater than 10% of its revenues, making it the second-largest revenue draw among its handset clients, which include Samsung, Sony Ericsson and Siemens.
Naturally, Motorola's growth will come at the cost of another customer.
"The revenues from Nokia will increase," said RF Micro investor relations representative Doug DeLieto. "Even as the percentage of our revenue represented by Nokia may decrease."
DeLieto also highlighted Samsung as one of the strongest gainers, on a percentage of revenue basis among its other handset customers. |
