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