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 Focus on
Radio Frequency Micro Devices (NASDAQ:RFMD):
Greensboro, North Carolina
Gallium Arsenide
Specialist -
Radio Frequency (RF) Integrated Circuits (RFICs)
... updated January 3, 1999)Background and History
of RF Micro:
RFMD designs, develops,
manufactures and markets proprietary radio
frequency integrated circuits ("RFICs")
for wireless communications applications. Much of its
revenues comes from the sale of RFICs used in cellular
telephones and PCS handsets, but it offers many other
standard and custom products. For the three months ended
June 30, 1998, 87% of the Company's revenues was derived
from the sale of gallium arsenide heterojunction
bipolar transistor ("GaAs HBT")
products.
TRW Inc.
("TRW") is the Company's largest shareholder,
owning 32.7% of its common. According to the recent 10K,
in June 1996, the Company and TRW entered into a broad
strategic relationship that included $15 million of
equity and debt financing from TRW. The key goal of the
Company in entering into this alliance was to enable the
Company to construct a four-inch wafer fabrication
facility to manufacture products using GaAs HBT
technologies developed by TRW and licensed to the
Company. Until June 1998, TRW manufactured all of the
Company's GaAs HBT products. TRW granted the Company a
license to use its GaAs HBT process, and RFMD recently
began manufacturing its own GaAs HBT products under this
license at its new wafer fabrication facility. The
Company's GaAs HBT power amplifiers and small signal
devices have been designed into equipment manufactured by
OEMs such as Nokia, Hyundai
Electronics, Phillips Consumer
Communications, Motorola and LG
Information and Communications, Ltd.
Recent Business and Financial
News
According to the latest 10Q filed in november '98, revenues increased 243% from the same quarter
last year, to $31.4 million. The company reported that
three-volt GaAs power amps dominated shipments. The GaAs
fab received ISO-9001 certification in August and
shipments at the end of the quarter exceeded plan, with
inventory turns increasing sequentially from the previous
quarter from 2.6 to 3.2, despite the addition of the new
wafer fab inventories.
Second Quarter Results:
(in
millions, except per share data)
|
2nd
Q'r 98
(ending 9/30/98)
|
2nd
Q'r 97
(ending 9/30/97)
|
Revenues
|
$31.4
|
$9.1
|
Pre-tax
Income
|
2.7
|
0.8
|
Taxes
|
0.3
|
negl.
|
Income
per share (diluted)
|
0.14
|
0.05
|
Shares
Out
|
17.3
|
17.3
|
A change in tax accruals
postively impacted earnings for the second quarter, as
RFMD tax counsellors recommended allowing for an
effective tax rate of only 12% for the remainder of the
fiscal year. Future increases in the rate of tax accrual
may skew the year-to-year comparison of after-tax income
as tax loss carryforwards 'burn off'.
In connection with TRW's investment in
the Company, the Company issued to TRW a warrant for the
purchase of up to 1,000,000 shares of RFMD common at $10
per share. This warrant was exercised in September 1998,
according to a Beneficial Ownership
filing at the SEC, where it
states: "TRW beneficially owns 5,621,487 shares
of Common Stock. The numberof shares of Common Stock
beneficially owned by TRW represents 32.7 percent of the
17,170,528 shares of Common Stock outstanding as of
September 14, 1998."
Capital Plans and Secondary
Offering
RFMD $40 million fab is now making four-inch GaAs HBT
wafers using TRW technologies. Production at the facility
is expected to increase throughout fiscal 1999.
Completion of the second phase, budgeted for $30 million,
would transfer additional TRW technology and expand wafer
fabrication capacity, but is dependent on raising
necessary capital and other factors. On December 22,
1998, RFMD filed an S-3 announcing its intention to offer 1.75 million
shares of common for the company and 250 thousand by TRW,
Inc.
Primary Competitors
The recent 10K identifies RFMD's primary
competitors as including Anadigics, Fujitsu,
Hewlett-Packard, Hitachi, Motorola, NEC, Philips,
Raytheon, Rockwell, Siemens and TriQuint.
Gilder Technology Report Comments on GaAs:
- Vol II, No. 3
(3/97): The
Tetherless Telecosm:
..."Tetherlessly transcending most of the
limitations of the current PC era, the most
common PC will be a digital cellular phone. ...
Thus the first PC of the new paradigm will
probably have to be CDMA (code division multiple
access), built from the bottom up to provide
bandwidth on demand, according to TCP-IP
standards, at a handful of milliwatts of
communications power (see GTR, January 1997) ... This up-spectrum bias assures the
continued success of companies pressing the
frontiers of microwave integrated circuits, low
noise amplifiers, power amplifiers, and other
devices that function in the gigahertz." -
p. 6-7.
..."This is the spectronic paradigm ...
[which] tends to favor the manufacturers of
gallium arsenide, indium phosphide, and silicon
germanium devices. ... [T]he current ride of ...
gallium arsenide (GaAs) innovators is likely to
continue. ... The major long term threat is
silicon germanium. [Which] combines much of the
manufacturability of silicon with the high
frequency operation of gallium arsenide." --
p. 7.
- Vol. II, No. 7
(7/97): "Strong
growth in the wireless and satellite
communications industries has raised the fortunes
of producers of gallium arsenide (GaAs) radio
frequency and digital semiconductors. ...
Threatening the ambitions of the GaAs
specialists, however, are recent advances in
silicon germanium (SiGe) semiconductors now
coming to market in commercial products. ... With
performance comparable to GaAs, SiGe chips cost
one third as much to build since they can be
manufactured on traditional silicon lines. ...
Given the advantages in cost and performance of
the SiGe chips, GaAs is now maturing and has been
deleted from our Table of ascendant
technologies." -- p. 5.
- Vol. II, No. 12
(12/97): Telecosm
Outlook: 1998 "With SiGe pulling even
with GaAs, but at a significant cost advantage,
the technology is poised to explode into the RF
IC marketplace. ... While SiGe will not supplant
existing gallium arsenide designs, the single
chip systems of the future will move toward the
new process." -- p. 3.
Other voices:
- "Charles Huang, executive
vice president of engineering at gallium arsenide
company Anadigics Inc., Warren, NJ, says that
silicon germanium still has to prove itself. He
expects gallium arsenide products to co-exist
with its new rival for years." -- Electronic
Business "Silicon
Germanium finds the Spotlight" (1/98)
RF Micro Devices is the subject of a message thread on Silicon
Investor, and another message thread at Yahoo!
Financial. Check there for
breaking news and views. See the right side gutter for
links.
Do your own research before buying any
security.
This focus page will be archived at nnarc-rfmd.html and
may be edited in the future. Check in at Net
Nuggets from time to time. The information
contained herein is believed to come from reliable
sources, but no warranty of accuracy is expressed or
implied. The author may own shares of this company
purchased on the open market and has never received or
been offered any compensation from Radio Frequency Micro
Devices, its agents or affiliates.
If you have verifiable information
about this company, its business plan or competitors, you
are invited to share it via email with me.
|
Rules for
Revolutionaries: The Capitalist Manifesto for Creating
New Products and Services
by Guy Kawasaki, Michele Moreno
(Contributor), Gary Kawasaki
Hardcover
- 224 pages 1 Ed edition (January 1999)
RF Micro Devices
...Home Page
...Online Catalog
...PR Archive
...Investor News
Investor
Relations:
4-year chart
(Ask Research)
RF Micro at Yahoo
Finance:
...Profile
...News
...Messages
...Insider Trades
FreeEDGAR:
...10K filed June '98
...Proxy Stmt July '98
...10Q filed Nov '98
...Beneficial Ownership filed
Sep '98
Silicon Investor
Discussion Thread:
RF Micro Devices (RFMD)
Customers:
...Nokia
...Hyundai
...Phillips
...Motorola
...LGIC
Other GaAs
Specialists:
Vitesse (VTSS)
Triquint (TQNT)
Anadigics (ANAD)
SiGe Specialists:
Analog Devices (ADI)
IBM (IBM)
Nortel (NT)
SiGe Microsystems
Background
Reading:
Gilder Technology
Reports:
State of the Telecosm:
Mid-Year Update (9/97)
Motley Fool:
Industry Snapshot of
"GaAs Valley"
(10/98)
Electronic
Business:
..."Wireless power
amplifiers get the GaAs
treatment"
(12/96)
..."GaAs sales heat up" (12/96)
..."GaAs vendors bullish
about growth"
(12/96)
...Silicon Germanium
finds the Spotlight
(1/98)
Ira Brodsky:
Wireless:The Revolution in Personal
Telecommunications
$50 at Amazon.com
Netscape Time
by Jim Clark, Owen Edwards
Hardcover, 304 pages
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Direct from Dell :
Strategies That Revolutionized an Industry
by Michael Dell, Catherine Fredman (Contributor)
Hardcover
- 288 pages (March 1999)
List
Price: $25.00
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Net Worth: Shaping Markets When
Customers Make the Rules
by John Hagel, Marc Singer, Marc
Stinger, John Hagel III
Hardcover
- 256 pages (January 1999)
List
Price: $24.95
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