To: John Pitera who wrote (45 ) 12/12/1999 7:27:00 PM From: John Pitera Read Replies (2) | Respond to of 2850
RFMD--Strives to be Dominant Player in Wireless Industry ( an update on RFMD on TSCN's Wallstreetcity.com,--- although RFMD has had very good revenue and sales growth, 73% of revenue this past year came from NOK. NEC, Phillips, and Siemens, have begun to develop and market their own GaAs HBT products . These large, established companies' entering this market will ultimately have a significant impact on prices for these products If NOK decided to go to one of the other vendors, RFMD would be affected in a pretty adverse way) (these have been my comments, article is below the line) (John) (for more RFMD background read the Post I responded too) ---------------------------------------------- Stocks in Focus Dec 10 1999 10:00AM CST Archives... RFMD Strives to be Dominant Player in Wireless Industry RF Micro Devices {RFMD} is an industry leader in custom designed radio frequency integrated circuits (RFICs). Incorporated in 1991, the Greensboro, North Carolina-based company designs, develops, manufactures and markets RFICs for various wireless applications such as cellular and personal communications services, cordless phones, wireless local area networks, wireless local loop handsets, industrial radios, wireless security systems and remote meter readers. The company strives to be the dominant supplier of RF products by offering a full range of standard and proprietary products including power amplifiers, modulators/demodulators, low noise amplifiers/mixers, transmitters, receivers and transceivers. They use three distinct process technologies to design their products - gallium arsenide heterojunction bipolar transistor, or GaAs HBT, silicon bipolar transistor, and gallium arsenide metal semiconductor field effect transistor, or GaAs MESFET. The explosive growth in wireless communications, specifically cellular and PCS phones, has helped drive the growth in the company's revenues from $45.3 million in March of 1998 to $152.1 million in March of 1999 . Net income increased to $19.5 million in March of 1999 from a loss of $523,000 in March of 1998. EPS for FY 1999 were $0.26 versus a loss of $0.01 for FY 1998. Projected EPS for FY 2000 and 2001 are $0.59 and $0.78, respectively. Insiders own 37.0 percent of the 79 million shares outstanding and institutions own 67.9 percent, representing a float of 50.0 million shares. Historically, the semiconductor industry has been characterized by "feast or famine" cycles. In RFMD's case, this characteristic is compounded by the fact that merely two customers generate the majority of their revenue. For the fiscal year ending March 31, 1999, sales to Nokia totaled $112.2 million, or 73 percent of RFMD's revenue. Motorola ranks as RFMD's second largest customer. The company expects this trend to continue, stating in their latest annual report that for fiscal year 1999, their top five customers accounted for 87 percent of their total revenue, up from 70 percent in fiscal 1998. The company addresses this issue by stating that the manufacture of exclusive, complex custom products for individual customers along with capacity constraints makes it difficult to expand their customer base. Also, the company's GaAs HBT products generate a substantial portion of total revenues, representing 87 percent of FY 1999 revenue. The company also expects this situation to continue. This heavy reliance on revenues generated by a single technology looms as a potential problem because competitors, which include NEC, Phillips, and Siemens, have begun to develop and market their own GaAs HBT products. These large, established companies' entering this market will ultimately have a significant impact on prices for these products. RFMD will have to address several issues in order to continue its success in the wireless communications industry. Factors that will play important roles include maintaining their leading role in the development of quality proprietary products, implementing measures to diversify their customer base and maintaining sufficient manufacturing capacity to meet increasing customer demand for RFIC products. wallstreetcity.com