Why RF Micro Shares Plummeted


Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of mobile phone radio chip maker RF Micro Devices sank 15% today after tech gorilla Qualcomm introduced a new set of radio frequency chips.

So what: Qualcomm said that its new RF360 Front End Solution will be a "comprehensive, system-level solution" that includes an antenna tuner, envelope power tracker, integrated power amplifier and antenna switch, forcing Mr. Market to discount the potential competitive impact on the much smaller RF Micro. Given Qualcomm's massive scale, deep R&D pockets, and wealth of expertise, it's no surprise that some RF Micro investors already seem to be conceding significant market share losses.

Now what: While analysts believe that Qualcomm will continue to work closely with RF vendors, its very entry into the space doesn't exactly bode well for RF Micro's long term. "Our new RF devices are tightly integrated and will allow us the flexibility and scalability to supply OEMs of all types, from those requiring only a region-specific LTE solution, to those needing LTE global roaming support," said Qualcomm's senior vice president of product management, Alex Katouzian. So when you couple the new competitive headwind facing RF Micro with the fact that its stock is still up about 30% from its 52-week lows, the risk/reward trade-off seems unappealing even after today's plunge.

  • Interested in more info on RF Micro Devices? Add it to your watchlist.

  • What about Qualcomm? Add it to your watchlist.

2013 and beyond
The Motley Fool's chief investment officer has selected his No. 1 stock for the next year. Find out which stock it is in the brand-new free report: "The Motley Fool's Top Stock for 2013." Just click here to access the report and find out the name of this under-the-radar company.

The article Why RF Micro Shares Plummeted originally appeared on Fool.com.

Fool contributor Brian Pacampara has no position in any stocks mentioned. The Motley Fool owns shares of Qualcomm. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.