NEW YORK (TheStreet) -- TriQuint Semiconductor (TQNT) was up 19.39% to $11.02 on Monday morning after RF Micro Devices (RFMD) announced that it would acquire the company for $1.6 billion in stock in a deal that could better position the new company in selling its chips to mobile device makers.
TriQuint shareholders will receive 1.675 shares of the new merged company for each share they own and RF Micro shareholders will receive one share, the two companies said in a joint statement. The companies expect the all-stock deal to create a company with combined revenue of more than $2 billion, and the two entities anticipate saving at least $150 million in costs from the merger.
RF Micro expects the deal to close in the second half of 2014.
"I believe this is an industry shaping event," said TriQuint CEO Ralph Quinsey in the companies' joint statement. "Through this combination of RFMD and TriQuint we form a diversified market leader with a highly compatible combination of products and technologies and a world class team focused on innovation and superior financial results. The alignment of culture between the two companies and the well matched products, capabilities and technologies will create compelling new opportunities."
TheStreet Ratings team rates TRIQUINT SEMICONDUCTOR INC as a "hold" with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate TRIQUINT SEMICONDUCTOR INC (TQNT) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and feeble growth in the company's earnings per share."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- TQNT's revenue growth has slightly outpaced the industry average of 5.9%. Since the same quarter one year prior, revenues rose by 14.6%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- TQNT has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. To add to this, TQNT has a quick ratio of 2.37, which demonstrates the ability of the company to cover short-term liquidity needs.
- 35.58% is the gross profit margin for TRIQUINT SEMICONDUCTOR INC which we consider to be strong. Regardless of TQNT's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, TQNT's net profit margin of -3.26% significantly underperformed when compared to the industry average.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Semiconductors & Semiconductor Equipment industry. The net income has significantly decreased by 132.6% when compared to the same quarter one year ago, falling from -$3.76 million to -$8.74 million.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, TRIQUINT SEMICONDUCTOR INC's return on equity significantly trails that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: TQNT Ratings Report