RFMD restructures, veers away from wireless systems

RF Micro Devices Inc. is reducing its investments in wireless systems, including cellular transceivers and GPS solutions, to focus on core semiconductor component opportunities, including cellular front ends and other components in its cellular products group and multimarket products group.

The firm 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.

"These strategic actions will enable RFMD to deliver more predictable financial results and substantially higher profitability," said Bob Bruggeworth, president and CEO of RFMD. "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 percent non-GAAP operating income and double-digit ROIC by the end of the calendar year."

RFMD projects approximately $40-50 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. The company is engaged in discussions with strategic and financial buyers for some of its assets, but is not disclosing any potential transactions, including possible proceeds. RFMD, however, assured it will fully support cellular transceivers currently in production or commencing production, including POLARIS 2, POLARIS 2 Radio Module, POLARIS 3 and POLARIS 3 Silver.