Forbes - RF Micro Cautions on Demand ::
March 29, 2007
Market Scan
RF Micro Cautions On Demand
Andrew Farrell, 03.29.07, 3:50 PM ET
A warning from RF Micro Devices that demand will weaken from a major customer pushed shares of the wireless technology company down.
RF Micro Devices shares dropped 10.8%, or 76 cents, to $6.31, in early afternoon trading Thursday after the company cautioned of a slowdown in its first quarter, which ends in June.
Chief Financial Officer Dean Priddy said in a statement that he anticipates a slowdown in demand from a top tier customer that will impact operating results.
The company didn’t specify the customer, but it designs and manufactures radio-frequency components for mobile phone manufacturers.
According to data compiled by Revere Data, Nokia and Motorola are the company’s largest customers. Nokia accounts for 38% of its revenue and Motorola accounts for 20%.
Weakening demand from Motorola seems a strong possibility given its recent problems. Last week, the cellphone maker warned investors to expect a first-quarter loss, and its problems have already been attributed to weaker sales at its other component makers like Texas Instruments. (See: “Motorola Calls In With Disappointing Results.”)
RF also reiterated previously stated fourth-quarter guidance. For the period ending March 31, the company expects earnings per share between 11 cents and 12 cents.
Analysts polled by Thomson Financial are estimating earnings per share of 11 cents for both the fourth quarter and the first quarter.
The company will provide further first-quarter guidance on an April 24 conference call. Standard & Poor’s Equity Research analyst Jawahar Hingorani said the slowing demand from the top tier customer is “some concern” but also said there is still upside for the company.
“We expect the company will continue to benefit from strong demand for handsets and from the rollout of 3G phones,” wrote the analyst in a client note.
RF Micro Cautions On Demand
Andrew Farrell, 03.29.07, 3:50 PM ET
A warning from RF Micro Devices that demand will weaken from a major customer pushed shares of the wireless technology company down.
RF Micro Devices shares dropped 10.8%, or 76 cents, to $6.31, in early afternoon trading Thursday after the company cautioned of a slowdown in its first quarter, which ends in June.
Chief Financial Officer Dean Priddy said in a statement that he anticipates a slowdown in demand from a top tier customer that will impact operating results.
The company didn’t specify the customer, but it designs and manufactures radio-frequency components for mobile phone manufacturers.
According to data compiled by Revere Data, Nokia and Motorola are the company’s largest customers. Nokia accounts for 38% of its revenue and Motorola accounts for 20%.
Weakening demand from Motorola seems a strong possibility given its recent problems. Last week, the cellphone maker warned investors to expect a first-quarter loss, and its problems have already been attributed to weaker sales at its other component makers like Texas Instruments. (See: “Motorola Calls In With Disappointing Results.”)
RF also reiterated previously stated fourth-quarter guidance. For the period ending March 31, the company expects earnings per share between 11 cents and 12 cents.
Analysts polled by Thomson Financial are estimating earnings per share of 11 cents for both the fourth quarter and the first quarter.
The company will provide further first-quarter guidance on an April 24 conference call. Standard & Poor’s Equity Research analyst Jawahar Hingorani said the slowing demand from the top tier customer is “some concern” but also said there is still upside for the company.
“We expect the company will continue to benefit from strong demand for handsets and from the rollout of 3G phones,” wrote the analyst in a client note.