Adam Harkness RFMD Presentation notes Aug 6,2003:
-greater than 40 percent market share
-increase GM last Q, expect to increase next Q
-Now only seeing 3 main PA manufacturers
-number 1 in PA
-$400 mil in space, driving growth
-2 nd growth area transceivers
-Handset opportunities,
-$2.25 in PA per handset
-cellular transceiver $3.50 per handset
-Wireless LAN
-GPS
If all items included in handset then can get $20 per handset
PC Business:
-PA still an opportunity for wireless LAN's
-can reduce cost from $5.00 to $3.00
-can reduce power consumption and increase throughput
working with INTC on RF transceivers for PC systems.
Automotive Business:
-GPS
-also statilite radio
-GPS chip $20
-Bluetooth for hand free access $4.00
End market size 1.1 billion right now
Positioning for a 6.6 billion business with other segments
Yields improved and margins coming up as a result last Q
doubling starts in 6 inch wafers
converting from one wafer supplier to another which will reduce cost:
Jazz new supplier
50 percent dollars of R&D being invested in new area
2 chips for 802.11 A and G, new products
Still investingin GaNi3 business
seeing some replacement product traction, some issues with SARS in China
big believer in Bluetooth
Financials:
Qaurterly rev nice year over year gains,
June Q most difficult Q, SARS, inventory, political problems
seeing recovery, seeing recover in OEM & ODM,
all standards TSM, GSM, CDMA
have seen share gains
saw bottom in GM in March
-saw PA in TDMA and CDMA GM bottom
Sept Q:will see more GM improvement, yields improvement and 6 inch coming on line
Seeing strong comeback in CDMA and TDMA business
conservative on GM on earning conference call as a result
guided to 4 cent lost this Q,
rev side turns business already this Q
GM tracking ahead of plan
balance sheet strong: 265 mil
issued 230 mil in convertible notes also in July
replaced 3 3/4 debt with 2 1/4 debt with bond buy back
43.8 day in DSO, strongest in industry
good shipment linearity
inventory turns were 6 last year, looking for 8
core buisness is profitable, but investments are driving losses
goals for company:
15 percent growth in sales would drop 15 cent in EPS to bottom line
if went from 84 percent utilization to 88 percent, would drop 4 cent to bottom line
new product businesses if they break even would add 28 cent to the bottom line
12 to 15 cent gain if we can improve efficiencies by doing own assembly work
Edge transceiver demand coming from customers
Total expect 73 to 76 cent to drop to bottom line if all come through
[Harry: You want to take this guidance with a gain of salt, but if you cut the numbers in half and give multiple of 20 you get a fair value of $7.60. It does not seems as overpriced on that basis. A lot of if's here, but long term there revenue model is looking better than I expected given the guidance from earlier in the year. There is a lot of expectation built into this stock at this level. They need pretty good execution to get these results.]
goal to be a $1 bil company from a $500 mil company
NOK number 1 customer
MOT number 2 customer
Samsung number 3 customer
Number 1 market share in PA, not vision of company though
Want to grow to $1 billion, have made investments
have product that will start to come on line in next 12 months
Currently addressable market is $1.1 bil, with new products will be $6.6 bil market
Handsets, Wireless LAN and Bluetooth will all grow this year
[Harry: If you hold this stock I would at least take to the time to hear the presentation. It is only 30 minutes.
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