RF Micro, Skyworks Slammed In Motorola Fallout

Shares of both RF Micro Devices (RFMD) and Skyworks Solutions (SWKS) got hit hard yesterday as analysts assesses the impact on the two mobile phone component providers from the weakening conditions at Motorola (MOT).

Michael Masdea, an analyst with Credit Suisse, estimates that Motorola accounts for about 20% of revenues at Skyworks, and about 30% at RF Micro. Masdea thinks Skyworks is actually somewhat more vulnerable than RF to Motorola’s current woes, since Skyworks has more exposure to lower-end phones, while RF is more focused on mid-tier phones where Motorola’s business remains solid.

Masdea notes that ON Semiconductor (ONNN), which supplies commodity analog chips to Motorola, also could be vulnerable, with 7% of its revenues from the troubled cell phone maker.

Ittai Kidron, an analyst at CIBC World Markets, cut his rating on RF Micro to Sector Performer from Sector Outperformer, specifically citing the company’s exposure to Motorola; Kidron trimmed his estimates for RF to 46 cents a share from 47 cents for the March 2007 fiscal year, and to 47 cents from 54 cents for FY 2008. Amit Kapur, at Piper Jaffray, maintained his Outperform rating on RF, but cut estimates to 48 cents from 50 cents for FY 2008, and to 54 cents from 56 cents for FY ‘09.

Meanwhile, Kidron asserted that “the cards are now stacked against Skyworks,” and advised that “it’s time management consider and explore strategic alternatives to enhance shareholder value.” He thinks “the best option could be Freescale.” Kidron trimmed his EPS estimates for the company to 36 cents a share from 50 cents for this year, and to 46 cents from 68 cents for next year. His price target goes to $8 from $9. Piper’s Kapur also cut estimates on Skyworks, though less dramatically. He goes to 53 cents from 54 cents for 2007, and to 49 cents from 50 cents for 2008.

There are actually quite a few companies with exposure of one kind or another to Motorola, and the Street tried to sort them out in a variety of research reports yesterday. Here’s a quick look at how some of the stocks are doing.

RF chips:

RF Micro: Down 32 cents at $7.08.

Skyworks: Down 29 cents at $6.22.

Other chip suppliers (far from a complete list, this is just a sample):

Texas Instruments (TXN): Down 23 cents at $31.47.

ON Semi: Up 10 cents at $10.00.

MOT’s pain, their gain:

Qualcomm (QCOM) (A potentially beneficiary from MOT’s plan for a more aggressive push into 3G): Down 5 cents to $43.68.

Nokia (NOK) (Picking up share while MOT loses it): Up 27 cents at $23.13.

RFMD vs. SWKS 1-yr chart