RF Micro Devices Delivers Record Quarterly Results

- Based On Existing Customer Forecasts, RFMD Currently Expects A Less-Than-Seasonal Quarterly Decline In Its Cellular Business During The March 2007 Quarter

GREENSBORO, N.C., Jan. 23 /PRNewswire-FirstCall/ -- RF Micro Devices, Inc. (NASDAQ: RFMD), a global leader in the design and manufacture of high-performance radio systems and solutions for applications that drive mobile communications, today reported financial results for its fiscal 2007 third quarter ended December 31, 2006. Quarterly revenue grew approximately 35% year-over-year and approximately 14% sequentially to a record $281.1 million. Operating income totaled $66.1 million, on a GAAP basis, and $35.2 million, on a non-GAAP basis. RFMD's December 2006 quarterly results reflected strength at the world's leading handset manufacturers, market share gains in RF semiconductors and record demand for RFMD's cellular transceivers and transmit modules.

    Business Unit Highlights

    Cellular

    -- RFMD expanded its leadership position in cellular transmit modules in
       low-tier handsets

    -- Sales of POLARIS(TM) TOTAL RADIO(TM) solutions grew sequentially for
       the tenth consecutive quarter

    -- RFMD secured POLARIS(TM) solution design wins across multiple tiers of
       handsets at original equipment manufacturers (OEMs) and original design
       manufacturers (ODMs)

    -- RFMD passed a key customer milestone during the December 2006 quarter
       related to its POLARIS(TM) 3 solution

    -- RFMD anticipates POLARIS(TM) sales will continue to grow sequentially
       in the March 2007 quarter

    Wireless Connectivity

    -- RFMD experienced strong design momentum for WLAN front end modules and
       power amplifiers for multiple applications, including handsets, access
       points, mobile computing and consumer electronics

    -- RFMD completed the sale of substantially all of its Bluetooth(R) assets
       to QUALCOMM

    -- RFMD has multiple customer engagements for its RF811X family of
       software-based GPS solutions and expects to receive commercial
       production orders in the first half of calendar 2007

    Infrastructure

    -- RFMD sampled its 15-watt RF3825 Gallium Nitride (GaN) Power IC to
       manufacturers of public mobile radios and other wideband applications

    -- RFMD sampled its new 48V, 120W WCDMA internally-matched GaN HPA
       (RF3925) to a key technology partner

GAAP and non-GAAP financial measures are presented in the tables below, and non-GAAP financial measures are reconciled to the corresponding GAAP financial measures in the financial statement portion of this press release.

                                 GAAP RESULTS
    (in millions,
    except percent-
    ages and per    Q3 Fiscal  Q2 Fiscal   % Change    Q3 Fiscal   % Change
    share data)        2007       2007    vs. Q2 2007    2006    vs. Q3 2006

    Revenue           $281.1     $246.9      13.8%      $208.0      35.2%
    Gross Margin        35.8%      34.9%      0.9 ppt     36.1%     (0.3)ppt
    Operating Income   $66.1      $13.0     407.6%       $17.1     285.8%
    Net Income (Loss)  $59.3     $(20.0)    397.0%       $14.7     304.2%
    Diluted EPS        $0.26     $(0.10)    353.6%       $0.07     274.3%



     NON-GAAP RESULTS (excluding share-based compensation, amortization,
   discontinuation of WLAN chipset development efforts, impairment charge,
     gain on sale of substantially all Bluetooth(R) assets, restructuring
   charges related to sale of substantially all Bluetooth(R) assets and the
                 tax effect on certain non-GAAP adjustments)

    (in millions,
    except percent-
    ages and per    Q3 Fiscal  Q2 Fiscal  % Change    Q3 Fiscal   % Change
    share data)       2007       2007    vs. Q2 2007    2006     vs. Q3 2006

    Revenue          $281.1     $246.9      13.8%      $208.0        35.2%
    Gross Margin       36.1%      35.3%      0.8 ppt     36.2%       (0.1)ppt
    Operating Income  $35.2      $22.8      54.2%       $18.8        87.2%
    Net Income        $34.3      $23.7      44.8%       $16.4       109.9%
    Diluted EPS       $0.16      $0.11      40.4%       $0.08        98.3%


    Financial Guidance And Business Outlook

RFMD believes it is benefiting from market share consolidation at its largest customers and robust overall unit demand for cellular handsets. RFMD expects to grow market share in cellular products in the March 2007 quarter, driven by sales of POLARIS(TM) cellular transceivers, as well as cellular power amplifier modules and transmit modules.

    -- Current customer forecasts for the March 2007 quarter indicate a
       less-than-seasonal decline in the Company's core cellular business

    -- Legacy 802.11b radio and Bluetooth(R) components are expected to
       decline sequentially at a greater-than-seasonal rate, as a result of
       previously announced divestitures

    -- Revenue in the March 2007 quarter is currently expected to be in the
       range of $250 million to $260 million

    -- Quarterly GAAP net income in the March 2007 quarter, assuming the
       previously announced Jazz Semiconductor transaction closes in the March
       2007 quarter, is currently expected to be in the range of $0.11 to
       $0.12 per diluted share, including estimated non-cash share-based
       compensation expense and non-cash amortization of intangibles of
       approximately $3.8 million in the aggregate

    -- Quarterly non-GAAP net income is currently expected to be in the range
       of $0.10 to $0.11 per share, excluding non-cash share-based
       compensation expense, non-cash amortization of intangibles and the
       impact of the Jazz Semiconductor transaction

The methodology used by RFMD to estimate non-cash share-based compensation expense does not factor in items such as new grants, terminations or amounts that may be capitalized in inventory, and the methodology used to estimate intangible amortization assumes no additional intangible assets are recorded. RFMD currently cannot estimate the impact of non-cash share-based compensation expense on gross margin or operating expenses and will provide this information with its March 2007 quarterly results. Accordingly, actual quarterly results may differ from these estimates, and such differences may be material.

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