For its fiscal third-quarter 2013 (ended 29 December 2012), radio-frequency component and compound semiconductor firm RF Micro Devices, of Greensboro, NC, USA has reported significantly improved financial results.Revenue was $271.2m, up 29.3% sequentially from $209.7m the previous quarter and up 20.3% on $225.4m a year ago.
Fiscal Q3/2012 Q4/2012 Q1/2013 Q2/2013 Q3/2013 Revenue $225.4m $187.9m $202.7m $209.7m $271.2m
The 29% sequential revenue growth was significantly more than the 17% forecast at the end of the previous quarter. The improvement reflected broad-based growth of 40% in RFMD’s Cellular Products Group (to $222.6m, with increasing content in smartphones and reference designs). In addition, there was 28% growth in high-performance WiFi (in support of multiple applications, including smartphones and consumer products) within RFMD’s Multi-Market Products Group (which however was relatively flat sequentially, at $48.6m overall).
“Our robust sequential revenue growth in the December 2012 quarter reflected continued content gains, category expansion, and growth in our addressable markets,” commented president & CEO Bob Bruggeworth.
On a non-GAAP basis, gross margin has grown from 30.2% a year ago and 35.2% last quarter to 35.5%. Operating income was $26.8m, nearly tripling from $9.2m last quarter. Net income was $21.3m ($0.08 per diluted share), up from $7.8m ($0.03 per diluted share). Cash flow from operations has increased from $1.9m to $43.3m, nearly offsetting the net cash paid for November’s acquisition of Amalfi Semiconductor.
The firm listed several strategic highlights from Q3 including: delivering robust sequential revenue growth across a broad set of products and customers; and the acquisition of RF CMOS technology provider Amalfi Semiconductor to complement its product portfolio for entry-level handsets and smart-phones. Furthermore RFMD’s MPG division started shipping high-performance 802.11ac WiFi front-ends in support of a leading smartphone manufacturer.
For the March quarter, RFMD expects to outperform normal seasonality, reflecting continued diversification, category expansion and content gains, combined with the benefit of significant customer product ramps. The firm currently believes the demand environment in its end-markets supports the following expectations and projections: revenue will fall by 6-8% sequentially to $250-255m; and non-GAAP earnings per share will be $0.04-0.05.
“We have secured major design wins during the latest quarter, and we are executing on multiple opportunities to increase our content generation-over-generation in the world's leading smartphones and expect to significantly outpace the growth rate of the underlying markets,” says Bruggeworth.
“In the coming March quarter, we expect our ability to capture an increasing amount of semiconductor content within smart devices and reference designs will enable RFMD to outperform normal seasonality,” adds Dean Priddy, chief financial officer & VP administration.
In the analysts conference that accompanied the announcement of the results, Bruggeworth was upbeat about his company’s market prospects, saying, “You have to look long and hard for an industry already this large which is still expected to grow as fast as the data mobility market over the next five years.
“As more and more devices connect to the Internet, more of them will need to be mobile, and more of them will require high-speed, reliable data connections. For RFMD, the implications are clear. Our products are the critical building blocks in this unwired world, and the problems they solve are at the very center of the mobility revolution.”
Bruggeworth also gave three reasons why the company has recently enjoyed strong revenue growth and robust design activity for in the area of 4G LTE devices. “One, the world's carriers are increasingly requiring LTE devices on their network; two, the growth rate for RF content in these devices over the long term will outpace device growth; and three, the increase in frequency band combinations and the increasing demand for new technologies such as antenna tuning, envelope tracking and carrier aggregation,” he adds. “RFMD has established clear market leadership in these next-generation RF technologies, and we are broadly engaged with the leading smartphone manufacturers and chipset providers to enable and perhaps accelerate widespread adoption.”
Bruggeworth also gave a brief update on RFMD’s acquisition of Amalfi and how the integration of that company and its activities were progressing. “We are well into the process of combining their product portfolio and the proprietary RF CMOS and mixed-signal expertise with our sales channels and global supply chain,” he says. “We are accelerating the adoption of these products in entry-level smartphones, and we intend to drive our RF CMOS technology and products into new markets and new customers. We anticipate this technology will provide us a path to lower costs and improved margins in entry-level handsets and smartphones.”
Considering the issue of likely future business, Priddy was asked by an analyst whether he was expecting “another 10% customer” during the [coming] March quarter. “It's always possible,” he replied. “But I think you can expect more customers in the 3-6% revenue range because, as we look at our customer mix now, we’re probably the most diversified from a customer standpoint and maybe in the history of RFMD as a public company. So we’re becoming very well distributed across the entire customer base. So that provides us, I believe, a great deal of comfort in terms of less revenue volatility.”
