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TriQuint Meets Scaled-Back Projections

The wireless component maker, however, didn't have as good a quarter as its handset customers.

Updated from 5:06 p.m. EST





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might have enjoyed the December quarter, but



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is glad to have it over. While wireless leaders reveled in good handset-unit revenue growth in the final quarter of 2001, lagging business for the mobile-phone component supplier spurred it to post a midquarter warning that subsequently shaved 25% off its share price.

TriQuint bid the fourth quarter of 2001 goodbye after the bell Thursday, turning in $65.4 million in revenue and a penny per share in pro forma profits, above scaled-back expectations. Wall Street consensus estimates called for $64.28 million in revenue and a 2 cents a share loss, according to The company deducted $90.5 million in write-downs on investments and facilities and a $29.7 million in tax gain to get to its pro forma profit. Including those items, TriQuint lost 46 cents a share, as calculated according to generally accepted accounting principles (GAAP).

Thursday TriQuint shares finished up 30 cents, or 3.2%, to $9.75.

The component maker's revenue dropped 27% from the fourth quarter of 2000, when it took in $90 million in revenue and turned a 27 cents a share profit. The company suffered an 18% sequential sales downturn from the third quarter's $80.1 million in revenue and its nickel per share in profitability.

Things won't get much better in the first quarter of 2002, either. TriQuint forecast that its revenues would fall into a range between $60 million to $65 million for a slight loss due to a post-holiday seasonal downtick. Unfortunately, it doesn't look as though TriQuint ever got a seasonal uptick: Its mobile phone revenues were flat from the third to the fourth quarters, unlike phone makers' results. TriQuint identified an increase in wireless infrastructure business, but said that mobile phones would be sluggish on through the first several months of 2002. Likewise optical networking is expected to stay slow.

The chipmaker expects 2002 revenues to fall to $280 million to $300 million, a 10% to 16% sequential yearly decline, allowing it to make 8 to 11 cents a share profit in 2002. During the full year 2001, TriQuint reaped $335 million -- a 27% decline from 2000's results -- and 26 cents a share pro forma income.

CEO Steve Sharpe said the wireless slowdown was expected and tried to get a positive angle on a fourth quarter that ended with a 0.8 book-to-bill ratio. "I'm feeling better," he said. "Maybe this is intuition, I think we're very close to the bottom in all our markets." For wireless base station followers and optical fans, that will sound like good news, but mobile phone markets might have hoped that the handset market would be well beyond that point.

On Dec. 18, TriQuint warned that its revenue would look a lot less like the $75 million to $80 million it predicted before the quarter began, and would more likely be scaled back to $64 million to $66 million. TriQuint had already braced the Street before its earnings preview for a seasonally weak first quarter of 2002, flat with the fourth quarter of 2001.

In its warning, the company revised its first-quarter outlook to make its revenue projections equal to the newly lowered view of fourth-quarter 2001. Additionally, the company detailed a $100 million impairment charge it would use to write off the cost of unused capacity and investments. TriQuint ended up taking only $92 million in charges, less than the $100 million estimate for the full year 2001, taking $13.6 million in write downs to calibrate the worth of its investments in private companies, about $45 million for unutilized factory equipment and $20 million for office space and manufacturing facilities in Oregon. When asked about the utilization level for TriQuint's current manufacturing facilities not included in the write-down, Sharp quipped, "we have to figure out what full is."

TriQuint is not a perfect indicator for the health of the mobile phone market because of its lack of components for GSM handsets that predominate in Europe and Asia, and which are becoming more prevalent in North America. Sharp explained that TriQuint saw strength in its CDMA and TDMA products, but only as 2002 develops will it have a suitable offering for GSM customers that have "pulled real hard for us to participate." Nokia contributes 15% of TriQuint revenue.