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RF Micro forecasts strong second-quarter as mobile chips sales rise

By Aurindom Mukherjee

(Reuters) - RF Micro Devices Inc forecast quarterly results above market expectations, helped by higher demand for its chips that connect devices such as Apple Inc's iPhone and Samsung Electronics Co's smartphones to networks.

Shares of the company, which also reported better-than-expected earnings for the quarter ended June 28, rose as much as 4.5 percent to $11 after the bell on Thursday.

The chipmaker, which supplies cellular radio frequency chips for use in mobile handsets, notebook computers and tablets, forecast second-quarter adjusted earnings of 27 cents per share.

Revenue is expected to be about $345 million. Analysts on average were expecting earnings of 20 cents per share on revenue of $328 million, according to Thomson Reuters I/B/E/S.

"We will probably hear that it has a lot to do with their largest customer, which they won't name, but obviously is Apple and the smartphone growth coming out of China right now is just on fire," Northland Capital Markets analyst Tom Sepenzis said.

Apple is expected to launch the next version of its iPhone in September, when it usually introduces its latest offerings.

"The iPhone 6 has a very good chance to see a much larger replacement rate because of the larger screen size," Sepenzis added.

The Apple supplier is expected to benefit from ramp of the iPhone 6 build. Analysts expect RF Micro to have a larger role in the latest iPhone than the earlier versions.

The company said in April it was beginning to support the volume ramps of many of this year's most popular devices.

Increasing demand for internet connectivity and social media while on the move is driving sales of mobile devices, which use more radio frequency chips than basic phones.

Smartphone users globally are expected to grow from 6.8 billion in the first quarter of 2014 to 9.2 billion by the end of 2019, according to a study by telecom networking equipment maker Ericsson. (http://bit.ly/1kFCEeD)

RF Micro's first-quarter net income jumped to $38.6 million, or 13 cents per share, from $1.6 million, or 1 cent per share, a year earlier.

Excluding one-time items, RF Micro earned 24 cents per share, above the average analyst estimate of 17 cents.

Gross margins jumped to 45 percent from 31.9 percent a year earlier.

Revenue rose 8 percent to $316.3 million, beating the average estimate of $305.7 million.

Greensboro, North Carolina-based RF Micro's shares closed at $10.53 on the Nasdaq on Thursday.

(Reporting By Aurindom Mukherjee in Bangalore; Editing by Don Sebastian)

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