RF Micro to Restructure, Cut 350 Jobs

SAN FRANCISCO -- RF Micro DevicesRFMD is dumping its cell phone transceiver chip business as it seeks to shore up its sagging profitability.

The company said Tuesday it will reduce investments in wireless systems, including cellular transceivers and GPS products, effective immediately. The move will save RF Micro roughly $75 million in product development costs in its new fiscal year.

Shares of RF Micro were off more than 4%, or 14 cents, to $3.31 in extended trading Tuesday.

"These strategic actions will enable RMFD to deliver more predictable financial results and substantially higher profitability," said CEO Bog Bruggerworth in a statement.

The move signals the end of the line for RF Micro's Polaris line of cell phone transceiver chips, which had been considered one of the company's main growth engines.

In a post-earnings conference call Tuesday, though, Bruggeworth said RF Micro was never able to earn a sufficient return from the Polaris business.

And with competitors like QualcommQCOM , BroadcomBRCM and ST MicroelectronicsSTM poised to suck more functions like the transceiver into upcoming all-in-one, integrated chips, RF Micro's standalone chip was facing increasingly tough odds.

"These are some very large competitors with scale, and a lot of them are bringing a lot to the table," says Michael Burton, an analyst at Think Equity Partners, which makes a market in RF Micro shares.

RF Micro will continue selling its new Polaris 3 chip for the next few quarters, but will no longer invest R&D resources into developing future version of the Polaris chip for next-generation phones based on the WCDMA standard or on 4G technology.