GaAs Valley

RF Micro Devices

RF Micro <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: RFMD)") else Response.Write("(Nasdaq: RFMD)") end if %> designs, develops, and markets proprietary radio frequency integrated circuits for wireless communications applications such as cellular and PCS, cordless telephones, wireless LANs, wireless local loop, industrial radios, wireless security and remote meter reading. The company went public back on June 3 and offers a broad array of products, including amplifiers, mixers, and modulators/demodulators, that represent a substantial majority of the radio frequency integrated circuits (RFICs) required in wireless subscriber equipment.

The company designs products using three distinct process technologies: GaAs HBT, GaAs MESFET, and silicon bipolar transistor. In its first quarter, approximately 81% of revenues were from GaAs HBT (Heterojunction Bipolar Transistor) products, while some 74% of revenues were for cellular and PCS handset products. The company revealed that it has had 63 design wins in 33 different applications during the first quarter as well.

As design wins continue to translate into production, earnings should accelerate in 1998; however, RF Micro recently announced that it had hit a bump in the road. Pre-announcing second quarter earnings, the company said that despite revenues increasing approximately 50% over the same quarter in the prior year, results for the second quarter of fiscal 1998 ending September 27, 1997 would be lower than analysts' estimates, which are currently $0.08 to $0.10 per share. The company currently trades at 50x forward earnings and needs to boost its return on invested capital in order to satisfy growth projections -- a feat that will be made easier as production is ramped up and as the company begins fabricating its own wafers in commercial quantities in the second half of 1998.

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