UPDATE - RF Micro posts higher sales, sees margin pressure
Tuesday January 21, 7:16 pm ET GREENSBORO, N.C., Jan 21 (Reuters) - Wireless semiconductor maker RF Micro Devices Inc. (NasdaqNM:RFMD - News) on Tuesday posted better-than-expected third-quarter results in a weak telecommunications market thanks to market-share gains.
The Greensboro, North Carolina-based company said it expects its gross margins to drop in the March quarter due to seasonal pressures. Earnings, revenues and margins will begin to show improvement beginning in its fiscal first quarter, which ends in June.
Shares of RF Micro dropped to $6.78 in extended-hours trading, down from its closing stock price of $6.91, as investors focused on the weak margins in the March quarter, analysts said.
"People don't give a hoot what they did (in the December quarter) -- it's what they're gonna do. It's a familiar RFMD scenario of delivering on the top line but under consistent margin pressure," said Sam May, U.S. Bancorp Piper Jaffray. May does not own shares of RF Micro and U.S. Bancorp does not do banking work for the company.
"They're doing fine. They have good visibility, but where margins settle in is the biggest determinant," May said.
For the quarter ended Dec. 31, RF Micro reported a net loss of $5.2 million, or 3 cents a share, compared with $3.5 million, or 2 cents a share, in the year-ago quarter.
Excluding one-time items, it earned $13.4 million, or 8 cents a share. That topped analysts' expectations, which ranged from 4 cents to 7 cents a share, with a mean forecast of 5 cents a share, according to research firm Thomson First Call.
Revenue rose 45 percent to $145.8 million from $100.6 million last year, driven by marketshare gains in its core market of power amplifiers for cellular handsets and continued strength in the WLAN (wireless local area network) market. Analysts expected sales of $132.4 million, according to Multex, another research firm.
RF Micro said it expects earnings for the quarter ending in March, 2003, to be in the range of nil to a loss of 1 cent per share. That forecast includes expenses related to the acquisitions of Resonext, which currently are expected to be about $8.1 million.
It said it already has orders on its books to support $135 million in revenues in the March quarter. Gross margins are expected to "trend down" in that quarter, but improve in the June quarter. It did not provide a specific margin forecast.
"This is not a revenue story. It's a gross margin story. The gross margin forecast was worse than expected and the operating costs for Resonext were higher than expected," said C.E. Unterberg Towbin analyst Kalpesh Kapadia, who does not own RF Micro stock.
The company also expects revenue and earnings to show improvement in the June quarter. Its results will continue to improve sequentially throughout the remainder of the calendar year.
"The initial forecasts we're getting from our customers is for a very strong June quarter," the company said. |
