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TriQuint (NASDAQ:TQNT) has been downgraded by Barclays from Overweight to Equalweight. The price target moved to $6 from $12. CY11 revenue and EPS estimates move to $923M/$0.68 (from $937M/$0.70 prior) with CY12 moving to $928M/$0.55 (from $1,057M/$0.70).

Barclays analysts seem to be increasingly more confident about Q3 but believe that guidance for Q4 is too aggressive.

Let's go back to the portion of the Q2 earnings call on July 28 when Blayne Curtis from Barclays asked about missing in Q2 and guidance for Q4 and beyond.

Blayne Curtis - Barclays Capital

Maybe I just want to go back to the guidance. I'm not understanding it fully. The 2G headwind, it seems like that was only $6 million in the June quarter, so it seemed like that there's not much that, that could fall down. Just some color as to why the flat guidance. And was there any design losses? Or is it purely just inventory that you're talking about there?

Ralph Quinsey

No, I think that we -- other than the design sockets that we gave away last year, I think where we are targeting the win, we are winning. When you look at the 2G losses, we had a step-down in Q1 with GSM, a step-down in Q2 with legacy CDMA. And then going forward, we carried those steps down. So that puts pressure on it. It's more of a transitional issue for us in Q3, where earlier in the year, we had expected some products to be more successful than they were, particularly Android Pad [ph], and to some extent, WLAN for Symbian phones. And so a function of those products not being successful and other product launches slipping a little bit, we've got this gap now in Q3, which results in the flat revenue guidance. Q4, I believe it should be strong sequential growth.

Blayne Curtis - Barclays Capital

Got you. And just the timing of this because it did seem like during the June quarter that you still thought that 20% was possible. So just trying to understand the timing of when this changed.

Ralph Quinsey

I understand the abruptness of the news. And we expected better success out of several products. And I was surprised at how quickly the 2G demand went away. Not the same magnitude but layered on top of that, we got a couple of other headwinds, right? We're seeing some macroeconomic headwinds associated with uncertainty in the marketplace, a little bit with the tsunami affecting our Networks business. And part of our growth this year has been in wireless LAN in total. And one of our partners is phasing down an older generation, that really creates sequentially a $5 million to $7 million headwind in wireless LAN that we have to push through. So I expect to see continued growth in our targeted markets offset by some of the headwinds we're seeing. And then really in Q4 is when the major design wins kick in.

Blayne Curtis - Barclays Capital

I got you. And then maybe just one clarification, I didn't realize you're talking on a year-over-year basis when you're talking about the headwinds. On a sequential basis by the 3 buckets, do you expect them all to be roughly flat? Or are there some up and down?

Ralph Quinsey

Sequentially, with our guide right now, we're actually a little bit conservative. And I would say flat in Mobile Devices, flat to down in Networks, flat in Defense and Aerospace. So by and large, we're conservatively guiding flat. Most of that in Mobile Devices is a lack of the new products taking off. I think that's going to hit towards the end of the quarter for some of our launches and well into Q4 for other launches across all of our markets.

Blayne Curtis - Barclays Capital

If I could just sneak one more in. The MMPAs you talked about maybe ramping into the year, how do you feel versus the competition as far as the timing of your product availability?

Ralph Quinsey

For the current version of the Qualcomm reference design, we feel that we have the best-performing and the lead position for the reference design that's going to the market, as we speak. So we think we feel pretty good about that.

Curtis had every reason to ask for answers to the misses. Guidance big, earnings not as big. Quinsey and TQNT management explained the situation very well and kept their heads held high while speaking of Q4, with product releases and winning targets to come. We know the work with Apple (NASDAQ:AAPL) is there, we know the work with Symbian and Nokia (NYSE:NOK) is not going to remain a focus if those customers cannot sell products. We know that macro has played havoc on us all. We also know that TQNT management has missed the last few quarters. I believe that is the bottom line of this downgrade. Barclays is simply hoping that TQNT misses again. Q3 guidance was very conservative, that's why there are no worries from Barclays there. Q4 guidance says +10% Q/Q and that's just too much for Barclays to handle. But not for TriQuint.

I believe TQNT will nail Q4. I think Q3 will prove to be a successful quarter and Q4 will prove to be the turning point for this company. 2012 will see the iPhone 5 release, as well as the third edition of the iPad. The lack of sales from Symbian and Nokia will begin to sort itself out one way or another and the increased capacity will begin to show its teeth. My price target remains $12.

Source: Barclays' Downgrade Of TriQuint Is A Buying Opportunity