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8 January 2009


RFMD generates $40m free cash flow; March quarter to be free cash flow positive

In its fiscal third-quarter 2009 (to end-December 2008), RF Micro Devices Inc of Greensboro, NC, USA generated about $40m in free cash flow (net cash provided by operating activities minus capital expenditures for purchases of property and equipment), according to Dean Priddy, chief financial officer & VP of administration, speaking at the 11th Annual Needham Growth Stock Conference in New York this week. Net debt was reduced by about $50m (mainly through the generation of cash and open-market repurchases of convertible notes).

This is despite RFMD previously (on 4 December) cutting its revenue guidance for the December to 15-20% below the low-end of the $253-271m guidance it provided on 28 October (i.e. $202-215m, down a massive 21-26% on last quarter’s $271.7m and down similarly on $268.2m a year ago).

Capital expenditure was about $5m in the December quarter, and the firm expects this to be about $20m in 2009. By comparison, CapEx was $113m for the 12 months to end-September 2008. “RFMD today is flexible and agile, as evidenced by our ability to quickly decrease capital expenditures, rationalize our supply chain and reduce expenses to match our current demand environment,” said president & CEO Bob Bruggeworth at the Needham conference. In December, the firm announced 250 job cuts (5% of its global workforce). This includes up to a third of its 300 staff at its 6” GaAs fab in Newton Aycliffe, UK (by shifting from 24/7 operation to running on 8-hour shifts, 5 days a week) and 150 in Greensboro (by idling its original, 4” wafer fab and transitioning its GaAs manufacturing to the site’s 6” fab, to take effect in the March quarter).

Consequently, RFMD currently expects to be free cash flow positive in the March quarter (fiscal fourth-quarter 2009), and continues to anticipate that free cash flow will improve in fiscal 2010 (beginning 29 March 2009) to $80-120m.

RFMD will report full financial results for its December 2008 quarter on 27 January.

See related items:

RFMD idling 4” Greensboro fab and laying off 150 staff

RFMD lowers revenue guidance and announces cost cutting

RFMD improves operating income after restructuring

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