RF Micro Feels the Handset Headache

Editor's Note: This column is a special bonus for RealMoney subscribers, written by Herb Greenberg. It appeared initially this afternoon on Street Insight. To sign up for Street Insight, where you can read Herb's commentary regularly, please click here.

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The tech chatter you keep hearing isn't as chipper as it might sound at first.

Take RF Micro Devices (RFMD - commentary - Cramer's Take). When the company reported fiscal first-quarter results last month, sales of $131.5 million were at the low end of guidance, and the loss of 4 cents per share was slightly better than expected. (This was after the company did a convertible. Beforehand, analysts had been touting a big upside surprise.) At the same time, the company forecast flat second-quarter revenue with a per-share loss that would narrow to perhaps 3 cents.

Fast forward to yesterday, when the company presented at the Adams Harkness Hill investment conference in Boston. In the main session, according to people who were there, RF Micro was its usual promotional self, but it pretty much stuck with the script. In the breakout, however -- again, according to my spies -- the company more or less thumbed its nose at Regulation FD by giving specific revenue figures. Specifically, RF Micro said sales were running at $13 million per week. That works out to about $150 million for the quarter, well above last month's low-$130 million range.

Sounds impressive, until you look at RF Micro's history and do the math: The fiscal second quarter is usually a seasonally good one for RF Micro, with average sequential growth over the past five years of 21%, as handsets are built for Christmas. Except this time, if the company's behind-closed-doors estimates are correct, it'll be more like 14%. So while the number may end up being better than expected, it'll still be less than usual -- and off a low base, to boot!

Ah, and why did RF Micro wait for a private session to provide specific figures? A spokesman didn't return my call.

Meanwhile, in other news that doesn't bode particularly well for the handset market, Lehman Brothers is reporting that European data suggest "a strong slowdown," with July units up a mere 3% year over year and down 4% from June. That compares with 7% sequential growth for July a year earlier.

Finally, today Taiwan Semiconductor (TSM - commentary - Cramer's Take) used the word "seasonal" to describe a slowdown in sales. That prompted Ted O'Neill of A.G. Edwards to write a note to his clients that said, "Spare me, please!"

He continued: "One of the smartest people I know told me that she only sees the word 'seasonal' when it's used as an excuse for an unexpected slowdown in sales. That is clearly what TSMC means when it uses the word!

"We went back and looked at the past four July sales reports from TSMC and the word 'seasonal' appears in none of them. In fact July sales show no seasonal pattern whatsoever. July sales increased in three of the last five years. Even the average is a positive number!

"Our conclusion is quite valid: a weak midquarter month at the world's largest chip foundry in the middle of the strongest seasonal quarter for chip sales overall isn't a positive."

Not (sounding like the broken record I am) that anybody really cares!

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Herb Greenberg writes regularly for Street Insight. In keeping with TheStreet.com's editorial policy, he doesn't own or short individual stocks, though he owns stock in TheStreet.com. He also doesn't invest in hedge funds or other private investment partnerships. He welcomes your feedback and invites you to send any to Herb Greenberg. Greenberg also writes a monthly column for Fortune.

Herb Greenberg is a regular contributor to TheStreet View, TheStreet.com's professional trading newsletter. For more information on this product, please click here.

Brian Harris and Mark Martinez assisted with the reporting of this column.