S&P cuts RF Micro view to negative

Standard & Poor's said it revised its outlook on RF Micro Devices Inc. to negative from stable following the company's announcement that March quarter earnings would be lower than expected because of increased inventory reserves and high product development expenses.

The corporate credit rating is affirmed at B+, and the subordinated debt rating is affirmed at B-.

S&P said RF Micro took inventory reserves against three of its products because of obsolescence and low demand, and at the same time accelerated product development on certain early stage transceivers and modules. As a result of the actions, EBITDA likely will be about breakeven for the March quarter, compared with an expectation of about $15 million. Debt to EBITDA will weaken to about 3.9x from 2.5x.

The ratings on RF Micro Devices Inc. reflect the company's reliance on the cell phone market, high R&D and capital spending levels, and increasing leverage. These factors are mitigated by its good position in its niche market and strong customer relationships, the agency said.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.