LOS ANGELES (AP) -- Shares of chipmaker RF Micro Devices Inc. plunged Wednesday after it forecast a weaker-than-expected quarter through September based on reduced expectations for sales of lower-end mobile phones.
THE SPARK: RF Micro said Tuesday that it expects revenue in the three months through September to be flat to down 5 percent from the quarter that ended June 30. The forecast for revenue of $193 million to $203 million was far below the $222 million analysts were expecting.
The company also forecast adjusted earnings of break-even to a penny per share, below the 4 cents analysts were expecting.
CEO Robert Bruggeworth told analysts that the outlook reflected the fact that consumers may be waiting for certain high-end phones that work on next-generation "LTE" cellular networks which won't help boost revenue until the quarter through December.
Regarding lower-end phones that work on second-generation or third-generation networks, "we are taking a little more cautious stance in the outlook ... given the global economic situations that are going on around us," he said.
He said "at least three" makers of lower-end cellphones had weak forecasts for the current quarter and the company's guidance reflected that weakness.
THE ANALYSIS: Dan Pfau, an analyst with Cantor Fitzgerald said customers are likely waiting the Samsung Galaxy S3 LTE and Apple iPhone 5.
With the weaker second-quarter guidance, Pfau slashed his estimate for full-year earnings to 11 cents per share on revenue of $851 million, down from an estimate of 18 cents per share on revenue of $881 million.
He kept a "buy" rating on the stock and an $8 target price.
"With products ramping into new 3G/4G platforms over the next year and with expanding margins, we find the shares attractive at current levels and suggest investors accumulate shares," he wrote in an analyst note.
THE BIG PICTURE: RF Micro designs and manufactures chips for mobile devices, wireless infrastructure, cable TV and broadband Internet providers and the aerospace and defense markets. It was founded in 1991 and is headquartered in Greensboro, N.C.
SHARE ACTION: Shares fell 64 cents, or 15 percent, to $3.65 in midday trading Wednesday. Shares have declined steadily from a 52-week peak of $7.89 reached in November.