Why RF Micro Shares Plummeted

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of mobile phone radio chip maker RF Micro Devices (NASDAQ: RFMD  ) sank 15% today after tech gorilla Qualcomm (NASDAQ: QCOM  ) introduced a new set of radio frequency chips.

So what: Qualcomm said that its new RF360 Front End Solution will be a "comprehensive, system-level solution" that includes an antenna tuner, envelope power tracker, integrated power amplifier and antenna switch, forcing Mr. Market to discount the potential competitive impact on the much smaller RF Micro. Given Qualcomm's massive scale, deep R&D pockets, and wealth of expertise, it's no surprise that some RF Micro investors already seem to be conceding significant market share losses.

Now what: While analysts believe that Qualcomm will continue to work closely with RF vendors, its very entry into the space doesn't exactly bode well for RF Micro's long term. "Our new RF devices are tightly integrated and will allow us the flexibility and scalability to supply OEMs of all types, from those requiring only a region-specific LTE solution, to those needing LTE global roaming support," said Qualcomm's senior vice president of product management, Alex Katouzian. So when you couple the new competitive headwind facing RF Micro with the fact that its stock is still up about 30% from its 52-week lows, the risk/reward trade-off seems unappealing even after today's plunge.

2013 and beyond
The Motley Fool's chief investment officer has selected his No. 1 stock for the next year. Find out which stock it is in the brand-new free report: "The Motley Fool's Top Stock for 2013." Just click here to access the report and find out the name of this under-the-radar company.


Read/Post Comments (1) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On February 21, 2013, at 3:45 PM, taishiba wrote:

    no. you did not do any real research on this.

    you just say 'it went down, now don't buy.'

    see here: Feeney thinks the Qualcomm part is too generic to pose a real threat - http://goo.gl/aBQ5x

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2269829, ~/Articles/ArticleHandler.aspx, 8/30/2014 4:27:58 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement