RF Micro Devices CEO Discusses F2Q2011 Results - Earnings Call Transcript

RF Micro Devices CEO Discusses F2Q2011 Results - Earnings Call Transcript
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RF Micro Devices, Inc. (



F2Q2011 Earnings Call Transcript

October 26, 2010 5:00 pm ET


Doug DeLieto – IR

Bob Bruggeworth – President and CEO

Dean Priddy – CFO, Corporate VP, Administration and Secretary

Eric Creviston – Corporate VP and President, Cellular Products Group

Bob Van Buskirk – Corporate VP and President, Multi-Market Products Group


Ittai Kidron – Oppenheimer

Harsh Kumar – Morgan, Keegan

Anthony Stoss – Craig-Hallum

Todd Koffman – Raymond James

Scott Searle – Merriman

Steven Hentschel [ph] – Gleacher & Company

Mike Burton – FBN Securities

Aalok Shah – D.A. Davidson

Vijay Rakesh – Sterne, Agee

Parag Agarwal – UBS

Venk Nathamuni – JP Morgan

Eric [ph] – Stifel Nicolaus

Quinn Bolton – Needham & Company

Frank Keller – Barclays Capital

Nathan Johnson – Pacific Crest Capital

Denim Vinodal [ph] – ABN Securities



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Good afternoon, ladies and gentlemen, thank you for standing by. Welcome to the RF Micro Devices second quarter fiscal 2011 conference call. During today’s presentation, all participants will be a listen-only mode. Following the presentation, the conference will be open for questions. (Operator instructions) This conference is being recorded today, Tuesday, October 26, 2010. And at this time, I’d like to turn the conference over to Doug DeLieto, Vice President, Investor Relations of RF Micro Devices. Please go ahead, sir.

Doug DeLieto


everyone, and welcome to our conference call. At 4:00 PM today, we issued a press release. If anyone listening did not receive a copy, please call Samantha Alfonso at the Financial Relations Board at 212-827-3746. Sam will fax a copy to you and verify that you are on our email list. In the meantime, the release is also available on our website, rfmd.com, under the heading, Investors.

At this time, I want to remind our audience that this call will include forward-looking statements that involve risk factors that could cause our actual results to differ materially from management’s current expectations. We encourage you to review the Safe Harbor statement contained in the earnings release published today as well as our most recent SEC filings for a complete description.

In today’s release and on today’s call, we provide both GAAP and non-GAAP financial measures. We provide the supplemental information to enable investors to perform additional comparisons of operating results and to analyze financial performance without the impact of certain non-cash expenses for unusual items that may obscure trends and our underlying performance.

During our call, our comments and comparisons to income statement items will be based primarily on non-GAAP results. For a complete reconciliation of GAAP to non-GAAP financial measures, please refer to our earnings release issued earlier today available on our corporate website, rfmd.com, under Investors.

Similarly, for an explanation of how RFMD calculates return on invested capital, free cash flow, and positive net cash position, please refer to today’s earnings release. In fairness to all listeners, we ask that participants please limit themselves to one question and a follow-up.

With me today on the line are Bob Bruggeworth, President and CEO; Dean Priddy, Chief Financial Officer; Eric Creviston, President of our Cellular Products Group; and Bob Van Buskirk, President of our Multi-Market Products Group, as well as other members of RFMD’s management team.

And with that, I’ll turn the call over to Bob.

Bob Bruggeworth

Thanks, Doug. And welcome, everyone. As you will see from our announcement today, RFMD is delivering robust financial performance supported by product and technology leadership and a broadening diversified base of customer engagements. RFMD’s September quarterly revenue expanded by 12.2% on a year-over-year basis and 4.4% quarter-over-quarter.

On the strength of new product launches and diversification efforts, we continue to reduce our exposure at our largest customer while sales to all other customers grew year-over-year by approximately 53%. As a result, RFMD delivered our sixth consecutive quarter of expanding operating income with the September quarter representing another company record. RFMD’s financial performance is the direct result of prior structural changes in the strategy and the organization’s crisp executions on that strategy.

Additionally, the end market wins are at our best, enabling us to take advantage of robust long-term secular growth trends in our end markets. The accelerating demand always-on mobile broadband is benefiting RFMD as infrastructures deploy as mobile broadband devices proliferate and as these devices operate across more frequency bands and more modes of connectivity.

RFMD also benefits with the increasing focus on energy conservation measured both in power efficiency of mobile devices and in the power consumption of both fixed and mobile networks. RFMD is capturing this growth by providing customers RF components that are smaller, more cost effective, and more power efficient with each generation. We call this superior functional density, and it enables RFMD’s customers to reduce product size, reduce power consumption, increase data throughput, lower costs, and ultimately, provide an enhanced user experience.

RFMD’s PowerSmart power platform is a clear demonstration of technology leadership and superior functional density. PowerSmart provides the lowest current consumption in the industry. It is half the size of competing solutions, requires less design and calibration time for our customers, is scalable up to 9 frequency bands, and supports any mobile operator with the flexibility to cover the globe with one RF front end solution.

We continue to forecast PowerSmart will ramp in the March 2011 quarter, and we now expect our lead PowerSmart customer will broadly feature PowerSmart across their next generation smartphone portfolio. We expect additional deployments to follow in rapid succession. As we indicated last quarter, we are already supporting multiple phone bills at five major smartphone OEMs and a list of customers and applications for PowerSmart continues to grow.

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