Short sellers beware!

Short sellers are falling in love with RF Micro Devices (NASDAQ: RFMD, Stock Forum). Shares short in the company moved up 2.2 million for the period ending May 30, to 29.7 million. RFMD shares are trading only at $3.62, down from its 52-week high of $7.46.

This is a case where shorts could be burned. The new build-out of national WiMax, with Sprint (NYSE: S, Stock Forum) out in front of a group including Intel (NASDAQ: INTL, Stock Forum) and Google (NASDAQ: GOOG, Stock Forum), may help radio frequency chip companies like RF Micro. But, for the company, that has to happen fast.

Shorts do have a reason to bet against the shares. The firm has had plenty of trouble in the recent past. It had to lay-off 350 people when it reported its most recent quarterly results.

For its fiscal Q4, RFMD's margins dropped from 35% a year ago to 26%. The company went from a profit of $30 million a year ago to a loss of $16 million. The firm also said its sequential grow rate could be as low as 4%.

RFMD also added it would get out of the GPS chip market and save $75 million in R&D. But, if WiMax does not start to catch on soon, Wall Street will have another reason to dump the shares.

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