Thursday, April 13, 2006

RFMI Files 10-Q Report

April 13, 2006

Last Weekend Satellite Standard Group (SSG) did a profile piece on RF Monolithics, a company that supplies filters to Sirius Satellite Radio as well as XM Satellite Radio. The SSG profile pointed out the relationship between RFM and the satellite radio services, as well as the diverse base of other industries that RFM is involved in. SSG outlined RFM as a potential derivative investment opportunity for those invested in Satellite Radio.

Toady RFM filed their SEC Form 10-Q. This is a quarterly report and represents the quarter that ended for RFM on February 28, 2006. The report is very detailed and offers color on each component of the RFM business, and shows guidance of a 20% increase in Year over Year sales growth. You can view the SEC filing by visiting the RFM website here.

The report does have a section where satellite radio is discussed. Excerpts from the report include:

“We provide filters for Sirius satellite radio Inc., and XM Satellite Radio Holdings, Inc. and we are working with them on future generations of product. We expect sales for the satellite radio application will continue to increase as subscriptions for these services continue to increase. We have seen growth in both automotive and general consumer applications for satellite radio service develop. The consumer portion of satellite radio is characterized by very short lead times as the firms manufacturing radios wait for orders from retail before placing orders for components. As a result forecasting is very difficult.”

“The market for satellite radio filters appears to be more price competitive than we have seen for some of the markets we serve. As a result, we reduced prices to maintain our market position, which partially offset the impact of an increase in the number of units sold. The decrease in average selling price in the current quarter was small in comparison to prior periods, at 2% when compared to the prior comparable period and nearly the same as the previous quarter. This price change was moderate due to our introduction of a new generation of filters that have not yet entered volume production. We anticipate sales at lower prices as later generations of satellite radio products begin to ship in greater volume. We expect the trend in the number of units sold to more than offset the trend for lower than average selling prices, resulting in a general trend of increased filter sales for at least the immediate future.”

There are some important items of interest here for satellite radio investors to digest:

1. Clearly satellite radio production is ramping up.
2. Clearly Sirius and XM are working to keep hardware costs down.
3. Clearly there is a new generation of filter getting ready to hit the market.
4. Clearly companies such as RFM are doing a lot of R&D into meeting the needs of Sirius and XM.

Satellite Standard Group is not a financial advisor. SSG fully encourages investors to do their own research and consult a Certified Financial Planner prior to making an investment decision.

The link for this write up is http://tinyurl.com/l34vy

4/13/2006 05:13:00 PM

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