Updated from April 22

Shares of

RF Micro Devices


shed 8% of their value in the wake of a disappointing earnings report. In recent trading, the stock was down 43 cents to $5.05.

This morning Wall Street analysts deplored the cell-phone chipmaker's dramatic slump in gross margins to 29.5%, down from 40.8% a year ago and from 37.3% last quarter. Margins were "a far cry" from implied guidance issued at the Deutsche Bank conference in mid-March, noted Brian Modoff, an analyst for the firm who reiterated his sell rating on the stock. Deutsche has no banking relations with RF Micro Devices.

At W.R. Hambrecht, Satya Chillara said he's gearing for another sequential decline in margins, though the company forecast they would rise slightly in the quarter now underway. "That 100 basis points

of predicted improvement, I'm not taking to the bank right now," said Chillara. He believes higher-margin CDMA handsets will stay weak in Asia, while lower-margin GSM handsets are likely to sell better to cost-conscious consumers.

Further holding down profits, RFMD has said two new, relatively high-margin products -- a new WLAN chip and the Polaris radio -- likely won't contribute much for another two to three quarters.

Chillara has a hold rating on the shares; Hambrecht doesn't do banking for RFMD.

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Yesterday the company posted results showing it swung to a loss of 7 cents a share for the March quarter, following its

warning earlier this month, and forecast a similar-sized loss for the quarter now under way.

The chipmaker had posted a 2-cent profit for the same period last year.

The company dipped into the red despite strong double-digit revenue growth, with sales of $138 million, up 38% from year ago levels. The loss largely reflects customers' growing preference for low-margin cell-phone handsets, which means RFMD must sell relatively lower-priced semiconductors to handset makers.

March quarter sales were in line with expectations. EPS was a penny light of the consensus number but in line with RFMD's own updated guidance for a loss of 5 cents to 7 cents. Until it reduced its forecast in early April, the chipmaker had been gearing for break-even to a penny loss per share.

The March loss also includes a noncash writedown of investments of $1.8 million and a depreciation expense of $2.1 million.

As for guidance, RFMD acknowledged that the shift in demand toward lower-margin components continued into the first weeks of the quarter that kicked off this month. As a result, it's guiding for sequential revenue to be flat to down 5%. It expects a loss of 5 to 6 cents per share.

Though business remains lousy, RFMD isn't alone: last week rival


(SWKS) - Get Report

issued an identical guidance range, for wireless sales to be flat to down 5% sequentially.