Business News
RFMD(R) Announces Strategic Restructuring to Leverage Leadership in RF Components and Compound Semiconductors
Wednesday 07. May 2008 - Company Expects to Eliminate Approximately $75 Million in Annual Wireless Systems Expenses
RF Micro Devices, Inc. (NASDAQ:RFMD), a global leader in the design and manufacture of high-performance semiconductor components, today announced that effective immediately RFMD(R) is reducing its investments in wireless systems, including cellular transceivers and GPS solutions, in order to focus on core semiconductor component opportunities, including cellular front ends and other components in RFMD’s Cellular Products Group (CPG) and the expanding portfolio of semiconductor components in RFMD’s Multi-Market Products Group (MPG).
As a result, RFMD currently expects to eliminate product development expenses related to its wireless systems business by approximately $75 million this fiscal year beginning in the June 2008 quarter, with the full benefit expected to be realized in the December 2008 quarter.
Bob Bruggeworth, president and CEO of RFMD, said, “These strategic actions will enable RFMD to deliver more predictable financial results and substantially higher profitability. We are the industry leader in RF components and the world’s largest manufacturer of compound semiconductors. We are investing in growing markets where we have a demonstrated track record of success, and we will measure our progress using operating income and return on invested capital (ROIC) as key performance metrics. We anticipate steady financial improvement throughout the year, and we currently forecast at least 10% non-GAAP operating income and double-digit ROIC by the end of the calendar year.
“While this is a difficult decision because of the impact on employees, these actions are the result of a comprehensive strategic review, including extensive market analyses and discussions with key customers and channel partners. We are confident the steps we have taken will increase shareholder value and provide significant long-term benefits to our global customers and stakeholders.”
Key Restructuring Actions
— RFMD is eliminating approximately $75 million in annual expenses by
reducing investments in wireless systems, including cellular
transceivers and GPS solutions.
— RFMD projects approximately $40 million — $50 million in restructuring
charges, approximately two-thirds of which is expected to be non-cash,
over the next two quarters with a global workforce reduction of
approximately 350 employees.
— RFMD is engaged in discussions with strategic and financial buyers for
some of these assets, but is not commenting currently on any potential
transactions, including possible proceeds.
— RFMD will fully support cellular transceivers currently in production
or commencing production, including POLARIS(R) 2, POLARIS 2 Radio
Module, POLARIS 3 and POLARIS 3 Silver(TM).
RFMD anticipates revenue growth in cellular transceivers in fiscal 2009, with transceiver revenue continuing in fiscal 2010.