Stock Market Watch

RFMD Tumbles after Revenue Warning

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Shares of RF Micro Devices (NASDAQ: RFMD) are plunging over 18 percent in morning trade after the company warned that it would miss its own prior quarterly revenue forecasts.Citing weaker-than-expected sales of 2G components to Chinese customers, the Greensboro, NC, tech company said late Thursday it expects to post fiscal third-quarter revenue of $225 million. This was significantly lower than its own prior forecast for $250 million in revenue.

RF Micro Devices also cited “broad weakness” in the end markets of its multi-market products group and warned it expects its gross margins to shrink quarter-over-quarter due to lower revenue, lower factory utilization and inventory reserves. However, MF Micro said sales of its components for 3G and 4G smartphones rose 16% quarter-over-quarter.

Bob Bruggeworth, president and CEO of RFMD, said, “RFMD is navigating broadly lower demand in 2G handsets and softness across MPG’s markets. Despite this challenging macro environment, RFMD is winning new business with industry-leading products and technologies, and we fully expect to grow in fiscal 2013, supported by market share gains, new product launches, and expanding relationships with both channel partners and customers.”


In the March 2012 quarter, RFMD anticipates normal seasonality in the handset industry and in MPG’s end markets. The Company will provide additional guidance in its quarterly earnings announcement and corresponding conference call on January 24, 2012.

Wall Street was not amused with RF Micro Devices on the gloomy forecasts sending its shares plunging over 20% in Friday morning trade. The losses come on top of a 27% decline in RF’s stock this past year.

The stock was additionally pressured by some negative commentary from analysts. Oppenheimer downgraded RF Micro and lowered its rating on the stock to “perform” from “outperform,” while Bank of America Merrill Lynch reduced its price target from $5.50 to $4.50. Shares hit a fresh 52 week low today amid the negative news flow and the analyst downgrades.

 

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edliston
Post Written By: Ed Liston

Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.


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Ed Liston

Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing.

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