C'mon, just say it.
Everybody knows who's behind the inventory glut in wireless handsets these days. But in its earnings release yesterday, RF Micro (NYSE: RFMD) continued to go easy on its "major customer" responsible for a poor earnings outlook. It's easy to say -- just put your lips together like this: Mo-to-ro-la.
As expected, cell phone giant Motorola's (NYSE: MOT) warning of slow sales will be keeping RF Micro's shelves stocked with excess products over the next several months. Even though RF Micro turned in a great quarter and end to its fiscal year, the impact of the Motorola cutback overshadowed the good news and sent the stock down 5% this morning.
RF Micro chipped in fourth-quarter revenue of $257.3 million, 13.9% higher than last year. The company also grew earnings 42% to $0.13 per share. Revenue for the full fiscal year topped out at $1.02 billion, up 32% from $770.2 million last year.
The company is citing a shift in product cycles as reason for some optimism about the future. If it can successfully diversify newer, higher-margin products across more customers, hiccups in end product sales from a single customer (a.k.a. Motorola) won't hit earnings as hard.
But the reality is that RF Micro's reliance on major manufacturers, such as Nokia (NYSE: NOK), Motorola, Samsung, and Sony Ericsson (the joint venture of Sony (NYSE: SNE) and Ericsson (NYSE: ERIC)), for the bulk of its revenue is unavoidable. Until it can take serious market share away from competitors Broadcom (Nasdaq: BRCM) and Skyworks (Nasdaq: SWKS) or diversify away from mobile phones, the company will be tied to the ups and downs of the global market for wireless devices.
With management's belief that excess inventory will drop next-quarter revenue to an expected range of $215 million to $230 million, investors don't have much to cheer about at this point. Until growth resumes later this year, the rest of the industry will have to party on without RF Micro and its secret party pooper.
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Fool contributor Dave Mock doesn't need a good reason to throw a party -- even bad reasons work fine. He owns shares of Motorola. Dave is the author of
The Qualcomm Equation. The Fool has a disclosure policy.
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