RF Micro revenue forecast misses, WiFi chip demand slows

Tue Oct 22, 2013 5:54pm EDT

(Reuters) - Chipmaker RF Micro Devices Inc (RFMD.O) forecast current-quarter revenue below market expectations, saying it expects revenue from its wireless infrastructure business to decline.

RF Micro's shares fell as much as 6.6 percent to $5.75 after the bell on Tuesday.

The company's multi-market products business unit, which makes chips for wireless infrastructure such as WiFi connectivity, is its second-biggest revenue generator.

"I think the disappointment is that revenue forecast isn't as high as expectations," Charter Equity Research analyst Edward Snyder told Reuters.

"Sounds like their core business of handsets is doing better than expected, but their non-handset business has been weaker...I would expect its predominantly WiFi," Snyder added.

Revenue from RF Micro's its multi-markets products group slipped 2.1 percent in the year ended March due to lower demand for wireless infrastructure products. The segment contributed about 21 percent to total revenue.

RF Micro said on Tuesday it expected revenue from the business to decline in the current quarter ending December compared with the just-finished second quarter.

The chipmaker, which supplies cellular radio frequency chips for use in mobile devices such as handsets, notebook computers and tablets, forecast third-quarter adjusted earnings of 13-14 cents per share.

Revenue is expected to be flat to up 5 percent, implying revenue of $310.7 million to $326.2 million.

Analysts on average were expecting earnings of 13 cents per share on revenue of $326.3 million, according to Thomson Reuters I/B/E/S.

RF Micro, which counts Samsung Electronics Co Ltd (005930.KS) as its biggest customer, reported net income of $5.9 million, or 2 cents per share, for the second quarter, compared with a net loss of $16.5 million, or 6 cents per share, a year earlier.

Increasing demand for internet connectivity and social media while on the move is driving sales of mobile devices, which use more radio frequency chips than basic phones.

RBC Capital Markets analyst Doug Freedman said in September that a tear-down of Apple Inc's (AAPL.O) iPhone 5s and 5c models showed that RF Micro and Skyworks Solutions Inc (SWKS.O) had replaced the main antenna switch previously supplied to iPhones by Peregrine Semiconductor Corp PSMI.O.

Excluding one-time items, RF Micro earned 12 cents per share, above the average analyst estimates of 10 cents per share. Revenue rose 48 percent to $310.7 million. Analysts on an average had expected revenue of $308.2 million.

Greensboro, North Carolina-based RF Micro's shares closed at $6.16 on the Nasdaq on Tuesday.

(Reporting by Lehar Maan and Chandni Doulatramani in Bangalore; Editing by Maju Samuel and Ted Kerr)