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RF Micro Devices, Inc. (NASDAQ:RFMD)

Q4 2008 Earnings Call Transcript

May 6, 2008 5:00 pm ET

Executives

Doug DeLieto – VP of IR

Bob Bruggeworth – President and CEO

Dean Priddy – CFO, VP of Administration, and Secretary

Analysts

Amit Kapur – Piper Jaffray & Co.

John Lau – Jeffries & Co.

Edward Snyder – Charter Equity Research

Harsh Kumar – Morgan, Keegan & Company

Nathan Johnson – Pacific Crest Securities

Jeff Kvaal – Lehman Brothers

Avank Lafumi [ph] – JPMorgan

Mike Burton – ThinkEquity Partners

Aalok Shah – D.A. Davidson

Vijay Bhagavad [ph] – Deutsche Bank

Craig Ellis – Citigroup

Todd Koffman – Raymond James & Associates

Stephen Patel – American Technology Research

George Iwanyc – Oppenheimer & Co.

Operator

Good afternoon, ladies and gentlemen and thank you for standing by. Welcome to the RF Micro Devices fourth quarter earnings conference call. During today's presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be open for questions. (Operator instructions) This conference is being recorded Tuesday, May 6, 2008. I would now like to turn the conference over to Doug DeLieto, Vice President, Investor Relations. Please go ahead, sir.

Doug DeLieto

Thanks a lot. Good afternoon, everyone, and welcome to our conference call. At four o'clock today, we issued two press releases including our earnings release and a press release about our strategic restructuring. If anyone listening did not receive copies of these releases, please contact Janet Jasmine at the Financial Relations Board at 212-827-3777. Janet will fax copies to you and verify that your name is on our distribution list. In the meantime, the releases are also available on our web site rfmd.com under Investor Info and at on prnewswire.com

At this time, I want to remind our audience that this call includes forward-looking statements within the meaning of the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include but are not limited to statements about our plans, objectives, representations and contentions and are not historical fact and typically are identified by use of terms such as may, will, should, could, expect, plan, anticipate, believe, estimate, predict, potential, continue and similar words, although some forward-looking statements are expressed differently. You should be aware that the forward-looking statements included herein represent management's current judgment and expectations but our actual results, events and performance could differ materially from those expressed or implied by forward-looking statements. We do not intend to update any of these forward-looking statements or publicly announce the results of any revisions to these forward-looking statements other than as is required under the federal securities laws.

Our business is subject to numerous risks and uncertainties including variability in quarterly operating results, the rate of growth and development of wireless markets, risks associated with our planned exit from our wireless systems business, including cellular transceivers and GPS solutions, the risk that restructuring charges may be greater than originally anticipated and that the cost savings and other benefits from the restructuring may not be achieved, risks associated with the operation of our wafer fabrication facilities, molecular beam epitaxy facility, assembly facility and test and tape and reel facilities, our ability to complete acquisitions and integrate acquired companies including the risks that we may not realize expected synergies from our business combinations, our ability to attract and retain skilled personnel and develop leaders, variability in production, our ability to reduce costs and improve gross margin by implementing innovative technologies, our ability to bring new products to market, our ability to adjust production capacity in a timely fashion in response to changes and demands for our products, dependence on a limited number of customers and dependence on third parties.

These and other risks and uncertainties which are described in more detail in our most recent annual report on Form 10-K and other reports filed with the Securities and Exchange Commission could cause actual results and developments to be materially different from those expressed or implied by any of these forward-looking statements. In today's press releases and on today's call, we provide both GAAP and non-GAAP financial measures. We provide the supplemental information to enable investors to perform additional comparisons of operating results and to analyze financial performance about the impact of certain non-cash expenses or unusual items that may obscure trends in our underlying performance.

During tonight's call, our comments and comparisons to income statement items will be based primarily on non-GAAP results. For a complete reconciliation of GAAP to non-GAAP financial measures, please refer to our earnings release issued earlier today, which is available on our corporate web site rfmd.com under the heading Investor Info. In fairness to all listeners, we ask that participants please limit themselves to one question and a follow up. After each person in the queue has received a turn, we will then give participants an opportunity to ask a second question.

With me today on the line are Bob Bruggeworth, President and CEO and Dean Priddy, Chief Financial Officer, as well as other members of RFMD's management team. And with that, I'll turn the call over to Bob.

Bob Bruggeworth

Thank you, Doug. Welcome everyone and thank you for joining us. Today we are announcing a very significant event that positions RFMD to deliver the largest increase in profitability in our Company's history. We are eliminating our investments in wireless systems in order to sharpen our focus on our high growth cellular components and on MPGs high-value RF components business. Effective immediately RFMD is no more – is more profitable and stronger Company that leverages a unique combination of two core competencies.

Our leadership in the development and manufacture of compounds semiconductors and our leadership in the design and manufacture of RF components. Our strategy is straight forward, measurable and one we will deliver on immediately. RFMD will extend and leverage its leadership in RF components and compound semiconductor technologies in multiple industries. As a result, RFMD currently expects to eliminate product development expenses related to our wireless systems business by approximately $75 million beginning in the June 2008 quarter, with the full benefit realized in the December 2008 quarter. This will have a profound impact on our operating results in the current fiscal year, as Dean will explain in a moment.

Before we outline specifically what actions we are taking, let's take a look at the process behind today's announcement. A little over a year ago, we made a major decision to focus on diversifying RFMD. We commenced an extensive review that evaluated each of our major investments and each of our near and long-term opportunities these investments were meant to support. As a result of our review, we confirmed that our wireless systems business including our cellular transceivers and GPS solutions would not achieve our internal financial hurdle rates, given the changing market dynamics in these businesses.

At the same time, we confirmed that our cellular front end components and other RF and compound semiconductor components do demonstrate consistently high return on invested capital or ROIC, they do have significant growth opportunities and do leverage our core strength in compound semiconductors and RF components. Until today our investments in wireless systems have effectively masked the profitability of our RF components. By exiting our wireless systems business, we believe that the true value of our components business will be unleashed.

We are turning our focus to our most profitable business, RF components, where RFMD is the recognized leader and where our unique combination of core competencies provides a clear competitive advantage. Now let's talk about the details. RFMD is more than ever focused on profitability and value creation. We will invest in technologies and growth opportunities that support our financial model. We will target new and existing opportunities that leverage our unique combination of our two synergistic core competencies.

RFMD is the industry leader in the development and manufacture of compound semiconductors, and we are the industry leader in the design and manufacture of RF components. CPG will narrow its focus on its core, high volume cellular components business, where we are ranked number one and where we have consistently earned a positive return on our invested capital. CPG will focus its investments on products and technologies that support our leadership in cellular front ends.

These products and technologies will leverage RFMD's RF expertise, semi-conductor process development and manufacturing know-how. MPG, which ranks as one of the world's largest and most diversified multi-market product groups, will continue to develop high value RF microwave and millimeter wave components. MPG will continue to expand its product offerings and addressable markets, as well as continue to leverage CPGs scale advantages, innovative technologies and deep knowledge of system architectures.

With these actions we are implementing, we are confident this strategy will lead to improved shareholder value. To that end we are sharpening our focus on financial metrics, including our ability to generate financial returns in excess of our cost of capital. As a result of these actions announced today, we are positioned to achieve significantly improved operating income and ROIC. For those of you modeling revenue for fiscal 2009, we do not expect material changes as a result of our actions to current consensus revenue estimates.

We will continue to support the manufacture of Polaris RF solutions currently in production including Polaris 2, Polaris 2 Radio Module, Polaris 3, and Polaris 3 Silver. We have stopped all new product development efforts in cellular transceivers and we expect to divest our GPS business. We have engaged strategic buyers for our GPS business and negotiations are ongoing.

To summarize, RFMD intends to invest in and grow our most profitable businesses and we expect to substantially improve our financial performance beginning in the current quarter. We are the industry leader in our core areas of focus and our actions announced today position RFMD for greater profitability as we extend and leverage our leadership in RF components and compound semiconductor technologies in the multiple industries.

Now I will turn the call over to Dean for greater detail about today's announcement and our financial outlook.

Dean Priddy

Thanks, Bob, and good afternoon everyone. Just as a reminder, as Doug pointed out earlier in the call, my comments and comparisons to income statement items will be based primarily on non-GAAP results. Today I'll cover the March financials and June guidance, then provide additional modeling information in light of today's announced strategic action. Moving to our quarterly results.

Revenue for the March quarter was $221.9 million, which was squarely within our guidance range of $215 million to $230 million. CPG contributed approximately $171 million in revenue. Consistent with guidance, CPG revenue reflected weakness as certain Chinese handset manufacturers along with product transitions at top tier customers. Both of these areas improved just as March quarter progressed and our overall demand for cellular front ends has continued to improve in the June quarter.

MPG contributed approximately $51 million in revenue with strength across all business units. MPG experienced particular strength in broadband, cable TV products, wireless LAN and wireless infrastructure. Gross profit was $68.8 million, with gross margin of 31% versus 29.6% last quarter, an increase of 140 basis points. The margin improvement reflects a higher percentage of revenue contributed by MPG.

Operating expenses were $80.9 million compared to operating expenses of $73.2 million last quarter, with the increase largely reflecting a full quarter of sensor [ph] expenses, along with one month of expenses related to the Filtronic acquisition. Operating loss was $12.1 million and other income was $3.6 million. The decrease in other income was primarily the result of our share repurchase and a generally lower cash balance.

Non-GAAP net income for the March quarter was $3 million or $0.01 per diluted share based on 276 million weighted average diluted shares outstanding. GAAP loss was $16.5 million or $0.06 per diluted share. Going to the balance sheet.

Total cash and short-term investments decreased to $230 million. The Company used approximately $100 million to repurchase stock, $25 million to purchase Filtronic and reclassified $27.3 million of auction rate securities to long-term assets. Net accounts receivable was $115.6 million with DSOs of 47 days versus 38 days last quarter. As anticipated, the March quarter us back end loaded which accounted for the increase in DSOs. Inventory increased to $191 million from $156 million last quarter, resulting in turns of 3.5.

Approximately one-third of the increase in inventories is attributable to the purchase of Filtronic. The remainder reflects purchases of long lead material for CPG along with a measured reduction in fab utilizations. Inventory has already declined over March levels and we anticipate a meaningful reduction in the June quarter with inventory turns improving throughout the calendar year. Net PP&E was $430.2 million compared to $418 million last quarter. CapEx during the quarter was $35 million with depreciation and amortization of $30.7 million.

Now, an update on the Filtronic acquisition. With the purchase of Filtronic, we now own a high volume, state-of-the-art gallium arsenide fab that will be carried at $0 value on our balance sheet, meaning each wafer we produce at our U.K. facility will not have any associated depreciation. In addition, with this transaction we acquired approximately $45 million in deferred tax assets that never expire and will be used to lower our cash tax liability as we recognize profit on GaAs wafers produced at our U.K. facility. All of this was acquired for $21.3 million net of cash, plus approximately $1.3 million in transaction costs. The integration of Filtronic is well underway and proceeding on plan.

Now for the guidance. We currently project June quarterly revenue to be in the range of $230 million to $245 million. CPG is experiencing strength in cellular front ends and forecasts 10% to 15% sequential growth in front end revenue in the June quarter, driven by all major air interface standards. RFMD is shipping production volumes to all five of the world's leading handset manufacturers and we expect to grow at four of the top five handset manufacturers in the June quarter. Additionally, Polaris 3 is expected to grow sequentially in the June quarter and throughout the calendar year, as new highly anticipated handset models are introduced.

Our share gains in cellular front ends and the ramp of Polaris 3 are offset in CPG guidance by conservative expectations for transceiver revenue at our largest Polaris 2 customer. RFMD is successfully building an accretive margin, highly diversified, multi-market business. We expect MPG to increase revenue 15% to 20% sequentially fueled by growth in each business unit, wireless infrastructure, broadband and consumer, standard products, wireless connectivity and aerospace and defense. Again, we expect 15 to 20% revenue growth in MPG driven by each of its business units and we are reiterating our $250 million revenue guidance for MPG this fiscal year.

Corporate gross margins are expected to improve sequentially 50 to 150 basis points driven by steady execution, operating efficiencies and improving product mix. Expenses will likely be flattish as we see a full quarter of Filtronic related expenses offset by wireless system expense reductions beginning late in the June quarter.

Other income should be approximately breakeven. Our GAAP loss per share is currently projected to be $0.03 to $0.04, not including the impact to restructuring charges which are very timing dependent. Non-GAAP EPS is anticipated to be approximately $0.01 to $0.02 per share. Regarding share count, you will see the benefit of our share repurchase during the June quarter and you can model approximately 262 million basic shares going forward.

Bob outlined RFMD's strategy of sharpening our focus on RF components, highlighted by CPG's industry leading cellular front ends and other components plus MPG's high value RF microwave and millimeter wave components. As a result of our strategic restructuring, RFMD expects to reduce annual expenses related to wireless systems product development by approximately $75 million beginning in the June quarter and completed by the end of the year.

These actions will result in restructuring charges of approximately $40 million to $50 million of which approximately two-thirds will be non-cash. We generally provide one quarter of guidance. But given the confidence we have in our strategic actions, we are providing visibility into the improvements in financial performance we anticipate by the end of this calendar year.

We expect our success will be measurable and we are using non-GAAP operating income and return on invested capital or ROIC as key performance metrics. For those of you building financial models, we calculate ROIC as annualized non-GAAP net operating profit adjusted for taxes divided by working capital less excess cash plus net PP&E, all of these items readily available on our income statement and balance sheet.

In fiscal 2009, RFMD anticipates substantially improved free cash flow as income improves, inventories are reduced and CapEx is significantly reduced year over year. We currently anticipate CapEx to be approximately $55 million in fiscal 2009 with inventory turns improving to over five. RFMD is entering a period in what we believe will be significant strategic and financial leverage. To date we've purchased 30 million RFMD's shares. We solved our PM [ph] cost issue with the acquisition of Filtronic.

We are seeing strength in cellular front ends and we are successfully building a world leading, accretive margin multi-market business. Strategically we focused our investments on RF components, where we have a track record of leadership with ability to leverage our design skills and compound semiconductor leadership. And we are eliminating approximately $75 million in product development expenses associated with non-performing businesses. By the end of this calendar year, we anticipate non-GAAP operating income of at least 10% of revenue and we project a double-digit run rate for ROIC during the same period.

And with that, I will open the call up to questions.

Question-and-Answer Session

Operator

Ladies and gentlemen, we will now begin the question-and-answer session. (Operator instructions) Our first question comes from Amit Kapur with Piper Jaffray. Please go ahead.

Amit Kapur – Piper Jaffray

Great. Thanks a lot guys. Maybe, Dean, just one quick clarification, you mentioned and are framing the $75 million in product development savings. Is that the total savings in OpEx or is that just going to be what the R&D is cut by and are there other OpEx savings that are going to be over and above that $75 million?

Dean Priddy

Amit, that is primarily R&D expenses. However, there will be a small amount of SG&A expenses associated with that.

Amit Kapur – Piper Jaffray

Okay. And maybe as a quick follow up, after this restructuring, how should we – what's the CPG business model and margin is going to look like after the restructuring?

Dean Priddy

We reiterate both our CPG and MPG financial models (inaudible) within the cellular products group gross margins of 35% and operating margins of 15% and in the multi-market or MPG business margins of 50% and operating margins of 20%.

Amit Kapur – Piper Jaffray

Okay. Great. Thanks.

Dean Priddy

Thanks.

Operator

Our next question comes from John Lau with Jefferies & Company. Please go ahead.

John Lau – Jefferies & Co.

Great, thanks. Dean, first question is that it looks like in exiting the development of the transceiver product lines, you are still going to be able to maintain the support level and the volume ramp production for the Polaris 3 going in throughout the life cycle of the current design wins. Is that correct? And I have a follow up.

Dean Priddy

That is correct. We expect Polaris 3 to grow throughout the calendar year and certainly see revenue well into next fiscal year as well.

John Lau – Jefferies & Co.

So, in terms of our modeling purposes, we are going to see continued sequential growth in the Polaris 3 and that's great for its investments that you've already had, but just that in our modeling purposes the costs are going to be coming down significantly during that time frame. So that's where you are going to get a lot of the lift on the operating margin side, Dean?

Dean Priddy

Yes, you'll see the leverage in the P&L with revenues still there but the R&D expense is associated with future generation transceiver products being eliminated.

John Lau – Jefferies & Co.

And then finally, on a year-over-year comparison basis, as you exit into '09, what type of a revenue were you running at for the transceiver from a historical basis that we can model for that roll off in 2009, Dean, calendar year 2009, sorry?

Dean Priddy

Yes. Well, it depends on whether you are looking at our largest customer or our second largest customer. We continue to ramp nicely with our largest customer with P3. The revenue for Polaris 2 has dropped off significantly and is expected to be virtually insignificant in the June quarter. So, I would expect less than 10% of revenue in the June quarter.

John Lau – Jefferies & Co.

For the transceivers. Great.

Dean Priddy

Yes.

John Lau – Jefferies & Co.

Thank you very much.

Operator

Our next question comes from George Iwanyc with Oppenheimer. Please go ahead. George Iwanyc with Oppenheimer, your line is open but we are unable to hear you. Our next question comes from Edward Snyder with Charter Equity.

Edward Snyder – Charter Equity

Thanks a lot. Dean, you just said, I think there may be some mix up on the last answer, you said 10% of your revenue for all transceivers or 10% for P2, just as a clarification? And then I have my two questions.

Dean Priddy

For all transceivers.

Edward Snyder – Charter Equity

Okay, just wanted to be sure. You mentioned in the press release that you saw mid-quarter ramp up in the GSM/GPRS front end, and one of your major customers ramped a new platform. This was one of the big impediment – weaknesses I guess last quarter when your second source didn't ramp yet. So should we expect to see more of an impact of that in following periods if that's ramping, given the volume that we saw with the primary supplier last period at all?

Bob Bruggeworth

This is Bob. Clearly we started to see that late in the March quarter, expecting it to ramp in June and all the way throughout the balance of the calendar and fiscal year.

Edward Snyder – Charter Equity

And then in terms of the charges you said they are very timing related. So it sounds from the press release that this is an immediate action. So, should we expect this to be more a front end loaded charge for the restructuring or something that's going to be spread over the entire period of the entire fiscal year?

Dean Priddy

As you recall, we mentioned that one business we expect to divest as a sale. And other charges will be spread throughout the quarter and into the September quarter and all of the actions that we've contemplated here will happen by the December quarter. That's why I gave the relative flattish expense guidance for the quarter. So it's very dependent on the timing of some of the events that will take place over the next few weeks.

Edward Snyder – Charter Equity

Okay. Thank you very much.

Dean Priddy

Thanks, Ed.

Operator

Our next question comes from Harsh Kumar with Morgan Keegan.

Harsh Kumar – Morgan Keegan

Hi, guys, couple of quick questions. Your decision to get out of some of these businesses, was that mostly predicated on financials or are you seeing some crosswinds in the industry? I'm mostly referring to single-chip architecture, could you just comment on that?

Bob Bruggeworth

This is Bob. I'll go ahead and take a look at first and foremost, what we looked at is the amount of money we are spending against the market opportunities. And so far, quite honestly, we haven't earned a return on that, and as we said it really hid the amount of money and masked the amount of money we were making in the other parts of our business. As we look forward, we still believe there are opportunities out there for stand-alone transceivers. However, when you look at the amount of money it takes to play in the game, the number of players along with what we are seeing in the SoC market, we said, geez, given all of that and the amount of money we are spending, we would be better off spending some money in other areas where we demonstrated we get much better returns without the uncertainty and risk that we see. And as we look at the strength that we are seeing in MPG and as the products that we are releasing there are taking hold, we look at the cellular front end market that we see significant growth in, and the new technologies that we are bringing out that we've talked about, that's a great place to spend some of that R&D. And when we looked at not just the opportunity for transceivers but also where we were spending money and again we weren't seeing the return we said, there are better places to invest some of our money and some of it's going to fall through, as we said here, with the $75 million to the bottom line to improve the overall profitability and cash flow of the Company.

Dean Priddy

I will say that in terms of EDGE SoCs, we have seen those are start to be delayed a bit. And I think this gives an increased window of opportunity for the EDGE transceivers that we already have on the market. So, that's actually falls into our core and those are products we are going to continue to support.

Harsh Kumar – Morgan Keegan

Okay. That's fair. And obviously a lot is going to change with your Company, maybe another question for Bob. We used to always look out for players and player sales and so on, so forth. What would be some of the key products going forward after this whole restructuring and the sales is done? Would you go back to being the bare bone peer manufacturer or are there some other key products that we should be looking out for in terms of your product portfolio for wireless handsets?

Bob Bruggeworth

Yes. Let's first not discount MPG. Clearly we are expecting significant growth, 15% to 20% this quarter along with we reiterated $250 million for the fiscal year for the business unit. What we have to remember is that's an extremely valuable and growing business. So when we look at the handset space, although you guys always look for the revenue, we were never able to turn that into any profits. What I think you can look forward to in our cellular business over the next couple of years is our ability to, number one, improve our gross margins and show you the profitability of that business, which you haven't seen because it's been, as I said earlier, masked by the amount of expenses we were putting on the transceiver business and what you saw on top line but never saw it translate to the bottom line. The second thing we talked about was the development in some of our internal filter capabilities and as much like PM became part of the modules for switches which drove our ASPs for TX modules, you'll start to see the bringing in of filtering capabilities within our front end modules along with we are still continuing our investments in MEMS so that we can build a very efficient and cost-effective front end modules to distance us from our competition, to help simplify the front end and the complex multi-mode 3G applications.

Harsh Kumar – Morgan Keegan

That's very helpful. Thank you.

Bob Bruggeworth

Thank you.

Operator

Our next question comes from James Faucette with Pacific Crest Securities.

Nathan Johnson – Pacific Crest Securities

This is Nathan Johnson for James. Just wanted to clarify on the revenue for Polaris. You mentioned it's going to sequentially increase through fiscal 2009. Is it 2010 that'll start dropping off? And then just a quick follow up on what we should be modeling as far as our tax rate going forward.

Dean Priddy

Yes, we commented that Polaris 3 revenue would continue to increase throughout this calendar year. And as far as fiscal year '10, I think it's a little too early to the call whether it will increase, stay flat or decrease. That's going to be very customer dependent and once again it's also going to be somewhat dependent on how successful some of the EDGE SoCs are getting into production. Like I said, we are seeing early stages of some delays there. So, we clearly see revenue continuing throughout fiscal year '10 for our EDGE transceivers.

Nathan Johnson – Pacific Crest Securities

Great. And as far as tax rate, what should we be assuming that?

Dean Priddy

Tax rate is going to be in the 25% to 30% range is what we currently estimate.

Nathan Johnson – Pacific Crest Securities

Great. Thank you very much.

Dean Priddy

Thanks.

Operator

Our next question comes from Jeff Kvaal with Lehman Brothers. Please go ahead.

Jeff Kvaal – Lehman Brothers

Yes. Thanks very much. Bob, I was wondering if you could tell us a little bit about the timing of the decision that you folks have taken. It sounds as though in some sense it's been in the works for sometime?

Bob Bruggeworth

Thank you, Jeff. As far as timing goes, what I talked about earlier was a year ago we started to do a comprehensive review of our business, and as I said, we met with customers and channel partners and continued to work through this and clearly as we discussed with our GPS solutions engaged with fire so it's been going on for sometime. As far as the final decision goes, we've got to work through many different – getting our own teams on board, figuring out what we are going to do, communicating internally, so it's been rather recent as far as the actual decision.

Jeff Kvaal – Lehman Brothers

Okay. Makes sense. And then I was wondering if, perhaps, Dean for you, are you folks now at your target model in CPG?

Dean Priddy

No, no, we are not at our target model but we do expect to see margin improvement in CPG in the coming quarter.

Jeff Kvaal – Lehman Brothers

I'm sorry, let me rephrase that a little bit. Excluding the transceiver business, are you guys at your target model?

Dean Priddy

The P3 revenue is dilutive to CPG margins. However, we are not quite there. We still have a bit of work to do, but as I outlined as we ramp the Filtronic facility, that is a high volume gallium arsenide facility and it's carried a zero value on our balance sheet. So, there won't be any depreciation expense associated with those wafers and every wafer we sell will recognize a profit in the U.K. that will have no tax liability associated with it while we use up $42 million in deferred tax assets. So, we've got some room to navigate here and ways to clearly improve our gross margin in our cellular products group.

Jeff Kvaal – Lehman Brothers

So, that suggests that by the time the end of the calendar year is over, you should be at your target model in both businesses?

Dean Priddy

It's certainly possible. I don't think that's something that we are committing to. But we are guiding to sequential improvement in the June quarter and I would expect to see sequential improvement again in the September quarter. So we'll take it basis points at a time.

Jeff Kvaal – Lehman Brothers

Okay. Thanks very much.

Operator

Our next question comes from Avank Lafumi [ph] with JPMorgan. Please go ahead.

Avank Lafumi – JPMorgan

Now that you've gotten out of the transceiver business what do you expect to be the mix between your CPG and MPG businesses currently at 75, 25 approximately, do you expect that to continue or do you expect MPG to grow at a much faster rate and account for more of your total revenue?

Bob Bruggeworth

Good question there. As far as the next quarter, we commented that our MPG is growing faster than CPG. We commented that if you look at the Company's total guidance, taking the midpoint of the range, it's much slower than the average that we are going to see for MPG. So over time we do expect MPG to become a bigger part. Now we are still going to have transceiver revenues, as Dean pointed out. And as EDGE continues to grow and SoCs are delayed that can be a large part of our revenue. I also want to comment that we are seeing nice growth in our 3G front ends, in our 3G business. And as 3G becomes a larger part of the market, that's going to be a larger growth rate for our cellular products group. And in fact we are growing at four of the top five in 3G as well, and many of them significantly. And a lot of that's with Qualcomm baseband. So we are seeing significant growth heading into the June quarter. So it's tough for me to say. I don't want to back away. MPG is growing solid. We said growth rates are faster than what the Company is guiding. But I also want people to know that, outside of the transceiver business, our cellular front ends are growing and we are executing on the first five customer base there as well.

Dean Priddy

I guess I would add one last thing. One of the overhangs that we've had with investors has been P2 revenue with one of our large customers and that revenue has declined to the point where it is essentially insignificant going forward. So, if it were to go away, it wouldn't be completely – it would not be missed very much in terms of total revenue. Now, it did impact March quarter and June quarter guidance because March was relatively strong and June quarter were being more conservative, but that revenue is now to the point where it shouldn't be much of an overhang.

Avank Lafumi – JPMorgan

Okay. Great. Thanks. And then as a quick follow up, why did your taxes go up or the tax benefit go up substantially this quarter?

Dean Priddy

Basically it had to do with the GAAP loss for the quarter.

Avank Lafumi – JPMorgan

Okay. Great. Thanks.

Operator

Next question comes from Mike Burton with ThinkEquity Partners. Please go ahead.

Mike Burton – ThinkEquity Partners

Thanks. I want to follow up on the margin improvement for next quarter. Looks more mix related but perhaps maybe if you could talk a little bit more about the margin levers that have been previously mentioned, is there more improvement still to be seen on the Polaris yields and did the Beijing facility ramp, is that completed or there's still some more leverage there?

Dean Priddy

Yes, we continue to have several margin levers. I think one of the biggest ones is as we ramp the Filtronic facility. We still have in our inventory some of the higher cost wafers that we had purchased while from Filtronic and those need to be flushed through the P&L so to speak. And that'll happen this quarter. We also would be somewhat increasing our assembly capabilities in Beijing which will provide lower cost assembly. We are working on some innovative substrate technologies that will lower our substrate cost and a lot of blocking and tackling. Die sizes we have gone after reducing die size with a vengeance with our design engineering resources. So, we've developed process technologies that allow us to significantly reduce our die size and that also is going to have a positive impact. So, there's just several different levers on gross margins, test yields, one of our higher running edge products, the test yields have improved about 20 points or so just in the last quarter or so. And that's going to have an impact as well. So, and just many different fronts, we are very positive about margin improvement and when you add to this the revenue growth in MPG, which we all know is accretive, highly accretive to company averages, that adds up to our confidence and our ability to expands our gross margins.

Bob Bruggeworth

Dean, I know you focused heavily on cellular because that was the question but we also expect to be able to improve gross margins on MPG throughout the fiscal year as we start to work through this soft synergies that we identified. We commented we'd achieved the hard synergies through the merger and successful integration. Now we are making progress on the soft synergies and expect to see that throughout the fiscal year as well.

Dean Priddy

Yes, similar to where we are staying [ph]. Some of the products in MPG also utilize switches that are produced in the Filtronic facility. So, there again, we benefit from ramping the Filtronic facility and lower cost GaAs sourcing. So there's also business there related that we acquired with the Filtronic facility that is accretive margin business as well.

Mike Burton – ThinkEquity Partners

Thank you. That's very helpful. Can you also just a couple housekeeping, one is the stock comp expense, can you break that down by bucket? And then if actually, if you could, then reconcile a little bit for me how we get from the GAAP EPS to the pro forma EPS? It looks like there's another, is it $6 million that we add in for the acquisition?

Dean Priddy

Yes, in terms of the 123 charges for the quarter, about $500,000 went through cost of goods sold. The remainder went through expenses. I don't think I generally break it out by G&A and R&D, but I can if you'd like. It's about $1.6 million in R&D and about $1.2 million in marketing, selling and $1.4 million in G&A. In terms of the GAAP and, or non-GAAP reconciliation, there's a table in the press release and we would have additional intangible amortization this quarter because of the Sirenza acquisition.

Mike Burton – ThinkEquity Partners

Great. Thanks. Last one is just 10% customers for the quarter and for the year?

Dean Priddy

For the quarter we had essentially two for the Company. I think in the future we are going to begin breaking out 10% customers more on a CPG, MPG basis. Within MPG, Motorola was a 10% customer for the quarter. Motorola is doing extremely well in MPG. They may not be showing strength now in transceivers, but in cable TV and wireless infrastructure and public mobile radio and in some other applications including WiMAX, Motorola is a very strong customer across the board for MPG.

Mike Burton – ThinkEquity Partners

Okay. Thanks.

Dean Priddy

Thank, Mike.

Operator

Our next question comes from Aalok Shah with Davidson.

Aalok Shah – D.A. Davidson

Hi, guys, couple of questions. First on the utilization rates right now, can you give me a sense of what you're expecting, what utilization rates are right now and what you're expecting them to be after we run through the P3 ramp?

Dean Priddy

Yes, I also think that's one of the nice leverage aspects of our financial model. Utilization rates are actually – have declined in our wafer fab facilities and we expect those rates to be improving as the year progresses. And as you know, as utilization rates improve, that typically implies margin expansion.

Aalok Shah – D.A. Davidson

The Filtronic fab, is that close to full capacity at this point?

Dean Priddy

No, no, it's not, and we have quite a way to go in terms of utilization rates. But I'll say since there is zero depreciation associated with it, there's not too much of an impact. But as you ramp that facility, you really get to see the leverage come from it.

Aalok Shah – D.A. Davidson

And Bob, just a couple of questions for you. I'm just curious at the timing of this event where you are shutting down the transceiver business. I'm just curious, was there a particular event that happened that made you consider this or was this because of the end of fiscal year, you take a look at your planning and strategy and trying to determine it that way?

Bob Bruggeworth

Yes, as I said earlier, we started the process over a year ago, revisiting all of our assumptions for each of our businesses. We talked earlier about our emphasis on diversifying our business and that's why we went out and acquired Sirenza and then also adding capacity with Filtronics for the support of our cellular components business. But in the transceiver area we've been watching it, looking at it, yes, we were ramping P2 back then and were beginning to ramp P3 and things look good. We were investing in our wideband CDMA, but when we looked at how much money we were investing, the large investment single bets look at what was going on with our customers, when we started a lot of it, there were a lot more customers just the sheer number. There wasn't as much concentration up at the top. And as you step back and realize that these guys are now controlling more and more of the industry, so pricing clearly had changed over the last couple of years. The opportunities, as we said, with some of the SoCs starting to make it to market, and looking at that risk, some of the shift in the balance of power to platform partners that were starting to arrange the marriages between the transceivers and basebands was shifting to the guys making the basebands who were also doing their own discrete or the SoCs. I think when you put all these things together it's not any one event. There was significant things going on in our market and, as I said, we had to adjust to those realities over time and look at the amount we were investing, the potential returns and we weren't even getting a return and then look at the other areas we could invest in along with, quite honestly, we were not pleased with our financial performance. So, I would say it was just a culmination of a number of things that started a year ago when we looked at our strategy, did we want to diversify outside of the cellular handset.

Aalok Shah – D.A. Davidson

Bob, if I can quickly follow up. On that end, did customers, when you spoke to them basically make up their mind that the front end module was the way that they were going to go, and not really push for more integration and that maybe helped your decision as well or was that really not an issue?

Bob Bruggeworth

That really wasn't an issue. We spent all our time on the again the arranging of who was going to make the decision on the transceiver, which particular baseband, along with our own thoughts and insights into integration and their our own strategies of where they would be investing their R&D over the next few years for products that will come to market in two to four years out and understanding that as well, with channel partners were emerging, recently there was another event we are bringing together of two our channel partners, ST and NXP coming together, where we have strengthened both relationships and seeing where that was headed. You just look at all of this. That's really what it was and getting their own insights into, did we have the partitioning that we saw going forward that we could drive a successful business in transceivers or just in the front end space. I think we've also got a lot of encouragement about the complexity that we see and shared with them our long-term road maps in 3G and the technologies that we are investing in there. Wideband CDMA for RFMD has always been a strength. As I said, we are growing significantly faster than the market this quarter. We are diversifying our business there and with the new technologies and product road maps we were bringing out, that's what got us excited when we talked to our customers, not the question mark about our transceiver business.

Aalok Shah – D.A. Davidson

Okay. And then last question for me on the GPS front, I know a couple of quarters ago, you talked about GPS win with a tier one handset vendor, is that basically going to go away given that you are shutting that business down as well?

Bob Bruggeworth

As far as, our opening comments, we did talk about we are engaged with strategic buyers. That opportunity is doing extremely well. And we are working with people that can take that technology and work to integrate that and continue to bring out more competitive solutions in the time ahead. So, that's all doing extremely well, and as I said, we are currently negotiating with buyers on the asset.

Aalok Shah – D.A. Davidson

If that business doesn't sell, let's say by the end of the year I think it was one year you are hoping to get that business ramped up, does that mean you'll still continue to supply that or ramp up on that or not really?

Bob Bruggeworth

I think our public comments are that we are engaged with strategic buyers.

Aalok Shah – D.A. Davidson

Okay. All right. Thank you very much.

Operator

Next question comes from Brian Modoff with Deutsche Bank. Please go ahead.

Vijay Bhagavad – Deutsche Bank

Hi, Bob. Hi, Dean, this is Vijay Bhagavad [ph] calling in on behalf of Brian.

Bob Bruggeworth

Hi, Vijay.

Dean Priddy

Hi, Vijay.

Vijay Bhagavad – Deutsche Bank

Hi. The question for you is what's your customers' response been to your announcement today on your wireless system restructuring? And are they concerned that you would not be able to support their existing Polaris portfolio? And just a quick follow up on, if you could give us numbers on the cash flow from operations, CapEx and depreciation for modeling purpose? Thanks.

Bob Bruggeworth

Vijay, I will take the easier one which is the first, and I'll let Dean answer all the numbers. As far as our customers go, this was not a surprise. We have a limited customer base, which obviously as I said we've been out talking to our customers, understanding where they were headed. They know we are going to support them. They know we are going to take care of them. And as Dean pointed out, we have some resources here to maintain and support them and make sure that we continue to improve yields and work on our cost reductions. And on our development of new programs, clearly those programs were out far enough and working with the customers, this will be a non-event. Again what I think they are excited about is this will allow to us focus on our front end business, our channel partners are excited because there are no perceived conflicts. So that we can sit with our technical experts and our fellow engineers on our end that absolutely understand the systems expertise that we have created. Our fellows and our top talent are staying with us so that we can work with our channel partners to bring out extremely compelling front ends and leverage that systems expertise that we built, along with the technologies that we have in development that will differentiate us, again, with the complexities that we see coming in 3G multi-mode coming forward these skills are needed and I just want to remind the group as we see it that this tam is growing significantly in the front end space. So, we expect it to grow somewhere from $2.5 billion to $3.5 billion between now and 2010. So, that's a lot of opportunity for us and we are developing the technologies to go get it.

Vijay Bhagavad – Deutsche Bank

So net-net, you don't anticipate any concerns and issues from your customers regarding today's news announcement?

Bob Bruggeworth

No, we do not.

Vijay Bhagavad – Deutsche Bank

And then on the numbers, the cash flow from operations, CapEx, depreciation?

Dean Priddy

Yes, we commented on last quarter's conference call. We expect FY '09 to be a great year for our free cash flow. And just as we have leverage on the P&L and on ROIC, we've got significant leverage on free cash flow. If you take a step back, we spent about $120 million in CapEx in FY '08 and are projecting about $55 million in fiscal year '09. So, you take whatever beginning income that you have in your model and you can add back the non-cash expenses and then subtract out basically the $55 million. I think you can see that you can model significant free cash flow in excess of anything that we generated in the past few years. In terms of the actual Q4, it wasn't our best quarter in terms of cash flow. I mean we obviously, we were very bullish on our opportunities going forward, we repurchased stock, we acquired a business that had inventory and we built some inventory, and we had a bit of a back end loaded quarter that impacted DSOs. Now I've already commented that inventory has begun to come down. Turns are going to get back to their normal rate of five or better by the end of year. So, everything that we see is heading in the right direction in terms of cash flow from ops and free cash flow for FY '09 just like we believe the financial performance was the low watermark in the March quarter. In terms of income statement items, we believe that also to be the case for balance sheet items.

Vijay Bhagavad – Deutsche Bank

So, for modeling purposes for cash flow from operations what number should we use?

Dean Priddy

Well, I think you'll have to construct your own model. We are not going to tell you a specific number. For DSOs, use some historic number, DSOs will likely come down quarter over quarter and inventory turns will improve and then you'll have to start with whatever income number that you come up with. But we are going to have relatively light CapEx for the June quarter.

Vijay Bhagavad – Deutsche Bank

For the March quarter?

Dean Priddy

For the June quarter.

Vijay Bhagavad – Deutsche Bank

Yes, what was the number for the March quarter?

Dean Priddy

For the March quarter is $35 million and a significant percentage of that was used to essentially button down what we had started with our fab four here in Greensboro. So, that's pretty much behind us now.

Vijay Bhagavad – Deutsche Bank

So, for the March quarter for CapEx and depreciation, do we use $35 million and of around $31 million for depreciation?

Dean Priddy

Yes, cash flow from ops is minus $42 million for the March quarter, and CapEx was $35 million. Depreciation and amortization was I believe I said $33 million.

Vijay Bhagavad – Deutsche Bank

$33 million, okay, I noted as $31 million. All right. Thanks again.

Dean Priddy

Thank you.

Operator

Our next question comes from Craig Ellis with Citi. Please go ahead.

Craig Ellis – Citigroup

Thanks, guys. Dean, you might have already touched on this. I missed part of the call. Can you just talk through the pace at which you can move up through fiscal '09 towards that $18 million to $19 million of quarterly run rate savings, now that you're targeting the exit of the transceiver business?

Dean Priddy

I think we'll make a very rapid movement between now and the end of the September quarter.

Craig Ellis – Citigroup

So, we can model in full capture of that $18 million in the December quarter?

Dean Priddy

Yes, there could be some tails I would say into the December quarter depending on what we do with a couple of facility leases. But by and large we will have captured the $75 million in annual expense reduction by that time frame.

Craig Ellis – Citigroup

And are there any offsetting expenditures that we should be thinking about that could partially mitigate some of that savings, any growth initiatives that we need to allow for so we don't over estimate what the Company will capture?

Dean Priddy

Well, we should be very clear we are not stopping investments in our core business in RF semiconductors. We don't see any major type investments that we'll be making, but there will be some natural growth in expenses in our front end business and our multi-market product group business. But we think revenue is going to be growing much faster than that of expense rate.

Craig Ellis – Citigroup

Okay. And then on the second question with gross margins, you've provided a very pointed expectation for operating margin next year, I'm wondering if you can do the same thing for gross margin?

Dean Priddy

Well, we already looked out a couple of quarters and said in the June quarter, 50 to 150 basis points, and then we projected margin improvement again in the September quarter. If all goes according to plan, we will be projecting December improvement as well. But we are not going to commit to an absolute number because it's so dependent on utilizations and mix and so forth. But needless to say, we've got so many different levers now that are working in our favor in terms of margin improvement, we are very positive.

Craig Ellis – Citigroup

Do you think Dean that you can get anywhere close to the mid-30s level? But if the Company was equally optimistic in the past, with all due respect even with the Sirenza acquisition we are still below at a gross margin level where you were at a year ago if we look at the midpoint of the June guidance. So, obviously there are a number of levers you can pull, like filling up the Filtronic fab but it sounds like that will take a long time. So, can you just give us maybe your degree of conviction in moving gross margins higher as you go through the year?

Dean Priddy

The mid-30s for the total Company by the December quarter is definitely an achievable number.

Craig Ellis – Citigroup

Thanks, guys.

Dean Priddy

Thank you.

Operator

Next question comes from Todd Koffman with Raymond James. Please go ahead.

Todd Koffman – Raymond James

Yes. Just as a follow up to that last question, I think you said early on in the Q&A the CPG long-term business model you are not changing, which I guess is like 35% gross margin or something like that. But you're exiting this core performing product segment, so what's the offset as to why maybe the long-term gross margins in the CPG segment might not be higher than that now?

Bob Bruggeworth

Number one, just to be clear, when we were talking about total Company, we still have our transceiver business. Our margins in Polaris 2 are slightly higher than Polaris 3. Polaris 2, as Dean said, is becoming immaterial. Polaris 3 is ramping and it is significantly below the average for the Company. So, it brings it down. That's why. It's not as we said, we are shedding the development expenses, but we are still maintaining the revenue and that is the weighted average and that's why Dean is being cautious in his comments as we ramp the year.

Todd Koffman – Raymond James

But I thought the prior CPG operating margin was around 15% and I thought I heard Dean early on in the Q&A reiterate the CPG long-term operating margin is a 15% number. Did I misunderstand?

Dean Priddy

No. I absolutely reiterated our long-term cellular and multi-market financial models with 15% and 20% operating income respectively.

Todd Koffman – Raymond James

You are reiterating that but you are getting out of a segment that's absorbing a significant amount of operating expense, what's the offset as to why the long-term model might not drift higher, better?

Bob Bruggeworth

I guess we are arguing over long term? You guys are saying December, I don't consider that long term, it's couple more quarters of guidance, maybe that's where we are getting hung up.

Dean Priddy

Yes, and again the cellular space, achieving 35% gross margins consistently and 15% operating margins in the very high volume type business of cellular is world class type results. And the multi-market business, if that continues to grow faster than the cellular will actually be uplifting total Company margins because the margin profile is higher. So, it's we will wait and see. If we can drive cellular margins higher than that, we absolutely will. But that's not something we are committing to today. That's a significant though return on invested capital and free cash flow with those margin levels.

Todd Koffman – Raymond James

Thank you. Good luck.

Dean Priddy

Thanks.

Operator

Our next question comes from Stephen Patel with American Technology Research.

Stephen Patel – American Technology Research

Hi, guys, any signs of our resurgence of CDMA in China or any updates on the debate between that and W-CDMA there and what may win out following the Olympics?

Bob Bruggeworth

I think it would be very premature to make any forecast on that. We are seeing activity continue as CDMA on both infrastructure and handset designs but I think it's way premature for us to comment on that.

Dean Priddy

Definitely customer engagements though if that's what you are asking. There's lots of optimism from some customers in that market. So, it remains to be seen.

Stephen Patel – American Technology Research

Thank you.

Operator

(Operator instructions) Our next question is a follow up from George Iwanyc from Oppenheimer.

George Iwanyc – Oppenheimer

Thank you. Just following up on some of your earlier comments, Bob, do you believe exiting the transceiver business opens opportunities for you to get on more reference designs with baseband vendors?

Bob Bruggeworth

This is Bob. I'll go ahead and take that. As far as more opportunities, we were engaged with each and every one of them. I think what I would say is there was nothing preventing us from being engaged. What I commented on was the level of engagement and how we can have our systems experts work together to optimize designs. I think there will be more sharing just because engineers by nature, even if we tell them there's no problems, I think they still try to protect their IP. And since that potential threat of competing for that same board real estate has been removed, we do expect the depth of the engagements to change. But if you look at who has been producing discrete transceivers along with working on SoCs, we have been engaged with each and every one of them, baseband manufacturers out there. So, I expect to it improve in the depth of the relationship.

George Iwanyc – Oppenheimer

Okay. And following up on another one of your comments, you were talking about the increased complexity with the transition to 3G, how do you see your dollar content per phone trending over the next year as transceivers tail off and the 3G starts to ramp up?

Bob Bruggeworth

There's actually several 3G phones that we are working on now that have more dollar content than what we are selling in some of our EDGE transceiver products. So, clearly as multi-mode comes in and the number of bands and when we look at the complexity and filtering, the dollar opportunity can be every bit as big as what we see today.

George Iwanyc – Oppenheimer

Do you think you can keep your dollar content flat or still on a upward trend?

Bob Bruggeworth

I'm not sure what your modeling for our dollar content, since we don't really give a lot of clarity in our transceiver revenue. But what I think is important is, and maybe we are not clear enough on this, we are going to make more money per phone, that we are quite confident in. The amount of profit we can make per phone will increase significantly.

George Iwanyc – Oppenheimer

All right. Thank you very much.

Bob Bruggeworth

Thanks, George.

Operator

Our next question is a follow up from Edward Snyder with Charter Equity.

Edward Snyder – Charter Equity

Yes, going back to the transceiver exit, I know you guys talked about it a lot, but there are only a handful of possibilities here. Do the handsets move away from EDGE to 3G reducing the need for like your Polar products, it's one of the big drivers of course is to solve some of the problems faced uniquely in EDGE, we needed a polar solution to do that? Or did the linear solutions that you were competing with, did they encompass most of the gains you were getting polar, so it wasn't really that important to be buying a matched chipset polar and your front end module from the same vendor? And then the final choice, of course, is did competitors with polar solutions figure out how to match them to other vendors front end modules so you didn't have to the match set? I'm just trying to get the dynamic here that basically was one of your leading product lines and maybe is irrelevant in the next two, three years?

Bob Bruggeworth

This is Bob. I'm not sure how I want to answer this. We are not running away from EDGE and we are absolutely continuing to support our customers in EDGE.

Edward Snyder – Charter Equity

I understand that.

Bob Bruggeworth

When we stopped the development that was our wideband CDMA and our 4G LTE, WiMAX efforts and things like that and we were looking at TD-SCDMA, that's the development cost I was talking about. So we are not commenting at all about the three different scenarios that you commented on. We expect to sell a heck of a lot of EDGE transceivers over the next two years. That's not the dollars we cut. What we cut was the next-generation.

Edward Snyder – Charter Equity

I understand that, Bob, but the reality is that Motorola is not buying any more of your Polaris 2 devices, they are still producing EDGE phones. Samsung never really picked up on the polar solution, they brought something from Helios from Skyworks, but they never got your solutions. Nokia is obviously buying the P3 in droves. So, is it that EDGE is being eclipsed by wideband CDMA so there's not a need for polar as we understood it before or is it that other solutions are addressing most of the needs for EDGE or EDGE products so you are not going to see growth? Clearly you are guiding to no real big growth in polar EDGE transceivers after P3 ramps, right? I know that's pretty far out there but Motorola is going away and not coming back and Nokia is certainly ramping now, but we can reasonably expect, and correct me if I'm wrong, but we can reasonably expect that transceivers are not going to be a big business for you two years from now, three years from now. Is that a fair statement?

Bob Bruggeworth

That's correct, in three years that's a fair statement.

Edward Snyder – Charter Equity

Okay. Is it not going to be a big business because EDGE is going away and it's all moving to 3G, so you don't need EDGE or because you don't need polar for EDGE.

Bob Bruggeworth

Well, I think in three years the SoC is going to take a large part of that market in our opinion.

Edward Snyder – Charter Equity

Okay, well that's conjecture because no one has got a SoC EDGE working in to begin with right now?

Bob Bruggeworth

You said three years, Ed, so I gave you an answer in three years. And I'm not sure what you are arguing about far as polar mod, and mod signal and what actually you are after.

Edward Snyder – Charter Equity

When you go to Motorola, you have got P2 with Motorola, or you have got P2 at a major OEM and you just guided to do, as we all know, that the whole business for them is starting to die away, but they are still producing EDGE solutions. They are just not buying P2 for those solutions, for the current line of handsets. Now in your estimation, is that because there was a substitute product or because they moved away from EDGE only devices to wideband CDMA EDGE and don't need Polar? I'm just trying to get what the mechanism is.

Bob Bruggeworth

Let me answer a whole totally different way, and come at this a whole different way. We still expect to have the new phones ramping with P2. So, how about I answer that and P3.

Edward Snyder – Charter Equity

So, to the extent that your customers are using EDGE, those are still very viable solutions for them?

Bob Bruggeworth

Absolutely and they are still designing phones with them and we expect that to continue for sometime. Again I reiterate, what we stopped was our 3G, 4G development efforts and we continue to support new phone models that people are still designing that have not been released.

Edward Snyder – Charter Equity

Excellent. Thank you very much.

Operator

(Operator instructions) At this time, I'm showing no additional questions in the queue. I would like to turn the call back to management for any concluding remarks they may have.

Bob Bruggeworth

I would like to take this opportunity to reiterate what I said earlier in the prepared remarks. We are confident the actions we are taking to diversify our business, improve gross margin, grow our earnings per share and maximize our return on invested capital will create shareholder value. We look forward to updating you on our progress throughout the quarter, at investor conferences and on our next earnings call. Thank you and good night.

Operator

Ladies and gentlemen, this does conclude the RF Micro Devices fourth quarter earnings conference call. If you would like to listen to a replay of this call, it will be available by dialing 800-405-2236, or internationally at 303-590-3000 and entering pass code 11111145. ACT would like to thank you for your participation, and you may now disconnect.

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Source: RF Micro Devices, Inc. Q4 2008 Earnings Call Transcript
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