Anadigics, Handsets Slide on iPhone Competition

Anadigics (ANAD) shares are losing ground today on growing concerns that the company will be hurt by weakening demand for mobile handsets.

A pair of analysts weighed in on the company today with similarly cautious comments. Roth Capital’s Jay Srivatsa wrote this morning that Q2 results should be in line with the company’s guidance of revenue of $77 million to $79 million and non-GAAP profits of 16-17 cents a share. But he also noted that component sales to handset vendors could be adversely hurt going forward from weakening macro economic conditions. He notes that recent reports suggest slowing sales at both Samsung and LG Electronics, the company’s two largest handset customers. He also notes that Samsung “appears to have begun the process of reducing its inventory levels, which suggests to us that lower end handset weakness may be migrating to impact mid-end and high-end handset sales as well.” He added the introduction of Apple’s (AAPL) iPhone “could adversely impact sales of competing products that use ANAD’s power amplifier.”

Meanwhille, ThinkPanmure’s Mike Burton chopped his price target on the stock today to $10 from $12. Burton cut his 2008 EPS estimate to 68 cents from 73 cents, reducing 2009 to 78 cents, from 92 cents. The reductions reflect his view that handset maker build rates has come down considerably in the last two weeks. Burton is also concerned that future margin expansion could be constrianed by the company’s need for higher capital spending to support its growth rate. “We are anxious that these capacity needs may begin to weigh into margins, and if the company is in need of further spending, we may need to lower our margin assumptions further,” he writes.

As noted earlier, Burton also cut estimates today on RF Micro Devices (RFMD), again citing weakening in the handset sector.