In the 1990s, the controversial trend of outsourcing business processes to foreign markets usually involved jobs that required limited skill sets. But today, dramatic increases in skilled labor in developing nations such as China and India are drawing more and more technically-skilled functions to lower-cost regions. And while jobs are often lost domestically, the financial benefits to American companies are dramatic.
Wireless chip maker RF Micro's
For a small cap like RF Micro, that kind of money makes a big difference, especially since the company has been struggling lately with slowing growth. While RF Micro counts globally diversified players Nokia
Since companies such as Broadcom
Hot on the heels of the transition move, RF Micro also announced it will be producing its latest radio chip for cellular handsets in Beijing at a significant cost advantage to earlier generations of the product. For investors, that means higher margins and more profit from each sale.
With a stock that has sunk more than 60% in the past six months, value investors and market skeptics may want to revisit RF Micro, since it's currently priced at a mere 12 times earnings. If the company can catalyze meaningful efficiency in operations and capture more volume with its latest generation of solutions, margins will snap back into line, making the stock look like a bargain.
Like peanut butter and jelly, Fool contributor Dave Mock sticks with what works. Dave owns shares of Motorola and Qualcomm and is the author of The Qualcomm Equation. The Fool's disclosure policy lands on its feet even if it's dropped with peanut butter toast on top.