RF Micro Devices Q2 Results Beat View, But Revenue Outlook Disappoints

(RTTNews) - Chipmaker RF Micro Devices Inc. (RFMD) on Tuesday reported a turnaround to profit in the second quarter on strong revenue growth as well as higher margins. Both revenue and adjusted earnings per share beat analysts' estimates.

Looking ahead, the company forecast earnings for the third quarter mostly above Street expectations, but projects revenues below their estimates. Shares of the company declined more than 6 percent in extended trades.

The Greensboro, North Carolina-based maker of high-performance radio frequency solutions said its net income for the second quarter was $5.89 million or $0.02 per share, compared to net loss of $16.46 million or $0.06 per share in the year-ago period.

Excluding amortization costs and other items, adjusted earnings for the quarter were $33.94 million or $0.12 per share, compared with $7.83 million or $0.03 per share in the year-ago period. On average, sixteen analysts polled by Thomson Reuters expected the company to report earnings of $0.10 per share for the quarter. Analysts' estimates typically exclude special items.

Revenues for the second quarter grew 48 percent to $310.72 million from $209.67 million in the prior-year period. Analysts had a consensus revenue estimate for the quarter of $308.23 million.

According to RF Micro Devices, the growth in revenues were due primarily to generation-over-generation increases of the company's best-in-class RF solutions in the industry's marquee smartphones.

Gross margin for the quarter was 33.7 percent, up from 31.7 percent in the same period last year.

Looking ahead to the third quarter, RF Micro Devices forecasts adjusted earnings of $0.13 to $0.14 per share, while revenues are projected to be flat to up 5 percent sequentially, implying revenues in a range of $310.72 million to $326.26 million. Analysts expect the company to report earnings of $0.13 per share for the quarter on revenues of $326.29 million.

RF Micro Devices expects adjusted gross margin for the third quarter to expand sequentially by about 120 basis points. The company expects sequential revenue growth in Cellular Products Group or CPG during the third quarter, partially offset by a sequential decline in Multi-Market Products Group or MPG.

Bob Bruggeworth, president and CEO of RFMD, said, "In the December quarter, RFMD anticipates another quarter of significantly improved financial performance, given our expectations for continued dollar content growth, expansion into new categories, and the benefit of ongoing new product ramps."

For calendar 2014, RF Micro Devices expects to achieve quarterly adjusted gross margin model of 40 percent.

RFMD closed Tuesday's regular trading session at $6.16, up $0.06 or 0.98 percent on a volume of 9.20 million shares. However, in after-hours, the stock declined $0.42 or 6.82 percent to $5.74.