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Were not overly bullish!

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We need to give fair time to both bulls and bears and we try and call things like we see them. It's not a euphoric market in all sectors. The telecom stocks look like they're under pressure today. Here are some comments from Eric Utley that were posted in the "market monitor" that our e-mail subscribers that can't get on the internet site may want to read. I'm also going to post a chart of RF Micro Devices (NASDAQ:RFMD).

RF Micro Devices - $1 and $0.50 box

Adding to Jeff Bailey's 11:46 observation, RF Micro Devices is a manufacturer of radio frequency integrated circuits -- the parts used in handsets. Technically, the company is considered a semiconductor concern, but it's more levered to the wireless telecom industry than any other. The company's primary competitors are Conexant, Hitachi, and Phillips. Its major customers include Nokia, Qualcomm, Ericsson, Motorola, and Kyocera. With the exception of Nokia, there hasn't been much good news from the aforementioned handset manufacturers. And Nokia's good news, I think, was a product of the company crushing its competitors and a short-term pop in holiday sales, and not necessarily organic growth in the industry. The adoption of wireless services has been much slower than many expected. Verizon confirmed that trend today, following similar announcements from Western Wireless and AirGate PCS. Verizon said this morning that it added about 715,000 new subscribers during the fourth-quarter, while estimates had been calling for an addition of about 1 million new subs. Clearly, the service providers are revealing that demand is lacking in the end-market.

Back to the component manufacturers, Conexant reported some very good things about its wireless division in late November. The company said that it would deliver 25 sequential growth from its wireless division in the first-quarter. That news boosted others like RFMD and was followed by a positive outlook by Nokia on December 11. But the recent subscription adoption numbers bring into question the good news from Conexant and Nokia. Those questions are being worked out in RFMD today, which I think works lower from here.

The company presented at an investor conference earlier today, unfortunately I was not on the Web cast. I haven't heard anything from the presentation, but judging by today's price action, I would bet that RFMD was less than bullish. The company reports next week.

Eric Utley
Option Investor

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