>Sandy Harrison, an analyst with Pacific Growth Securities ... "I'd heard they were doing well," he said. "And that 25 percent sequential growth is something."<
something, huh? thanks for boosting my confidence, David. between Sandy Duh Analyst and Jack on Da Box (see below), i should be having no problem getting my coveted finance job.
not to mention my coveted close-up with Willow Ba(b)y.
for entertainment purposes only ...
(i hope to post "something" more useful in a moment.)
-----
Business
Interview with Applied Micro Circuits - CEO
04/20/2000
CNNfn: Before Hours
JACK CAFFERTY, CNNfn ANCHOR, BEFORE HOURS: Here to tell us what lies ahead is David Rickey, CEO and president at Applied Micro Circuits (URL: amcc.com). Joining us from San Diego, California. Good morning, sir.
DAVID RICKEY, CEO, APPLIED MICRO CIRCUITS: Good morning, Jack.
CAFFERTY: Nice to have you with us. Give us an overview of the earnings. You have to be pleased with these numbers.
RICKEY: We're very happy. The earnings were 16 cent a share, revenue was up 25 percent sequentially and the outlook is even more encouraging. We had great bookings, very strong backlog. And we're just seeing great demand in the optical network in general.
CAFFERTY: We'll talk about all of the pluses here in a second. Are there any weakness as you look down the sheet, any places that are going to get your attention when you get through doing all of these interviews today?
RICKEY: Well, you know I don't think so. I think the main point is for us to simply execute. It is sort of our game to lose now. We have so much demand. We have such good product reception in the marketplace that we just need to execute at this point.
CAFFERTY: Kind of a nice position to be in, isn`t it
RICKEY: It's great. Couldn`t be happier.
CAFFERTY: Tell me a little bit about some of the products that are driving the earning for you.
RICKEY: Basically, our mission is to be the premier supplier of high bandwidth silicon, which means we make basically high-speed semiconductors which power the Internet and allow it to go faster. This is being driven by all the applications like e-commerce, facsimile, multimedia and soon to be the advent of video on the web. So, all these application are driving our demand for very high-speed products. We make products for example that go gigabits per second. Most people in their homes or PCs are used to a few megabits or even killibits per second. We make chips for the backbone of the network that basically go gigabits and eventually allow terabit type processing.
CAFFERTY: Gigabits, is that a million?
RICKEY: Gigabits is a billion per second.
CAFFERTY: A billion.
RICKEY: We do many gigabits per second of bandwidth of basically data per second. We have terabit routers and things like that coming which are 1,000 billion.
CAFFERTY: 1000 billion. That is mind-boggling. Those are terabits. I have to keep up. Terabits is the next quantum leap forward in speed, right?
RICKEY: Yes. And people are already talking about petabit routers which is a thousand terabits. Which is just great. It's hard to keep track of all of them.
CAFFERTY: You are enjoying some of the highest gross margins in the industry. Tell me how you managed to achieve that. And whether or not you see continued upside room in terms of your margins.
RICKEY: We do see upside probably into the mid 70s. And the reason for that is that we provide very compelling products that offer very creative feature content. For example some of our customers like the UUNets of the world who buy from our customers like NorTel and Cisco and Alcatel, they spend 10s of thousands of dollars for example on a particular wave length in order to repeat the signal across the country as the fiber optic cable degrades over a distance. Just sending optics hundreds of miles, you need to repeat the signal. They spend for example $75,000 per wave length amplifying the signal. For $400 of our silicon, they're able to reduce the number of times they need to repeat the signal across the country. So for a mere $400, I can eliminate 10s of thousands of cost for my customer. So, it is a win-win. And in the process I'm able to make significant growth margin because I'm able to design that silicon on a very compact, cost effective design.
CAFFERTY: On that $400 expenditure for example what kind of margin do you enjoy on that unit of sales?
RICKEY: You know, it maybe 70 to 85 percent gross margin. But the customer is also happy because they save tens of thousands of dollars. So, that is the trick is to get more efficiency out of the network. Everybody wins.
CAFFERTY: Absolutely. Let's talk about some of the acquisition that that I alluded to in the introduction. Cimmarron Communications (ph).
RICKEY: We acquired Cimmarron about one year ago. Cimmaron is Andover, Massachusetts based company which does some of the higher layered digital functions in the network. Our company historically was doing analogue and mixed signal high-speed. And the next layer in the network does more of the processing of data at slower speed, but does a lot more content. It aggregates many slower speed voice and data calls to higher speeds. Cimmarron has been a great success for us. Last quarter, we did about 3.3 million in revenue with the Cimmaron product line, but they booked over $10 million in new orders. So, the Cimmarron products are now just beginning on a fairly steep ramp. And we think they will be a very big part of our revenue in the near future.
CAFFERTY: What about Uninetworks (ph)?
RICKEY: Uninetworks is a company based in San Diego fortunately for us, which does even higher layers of the network. So, the Uni product line allows switch fabrics which will go into our customer's system at terabits per second. So extremely high speeds. And those work very well with our existing Cimmarron product and our Legacy AMCC products. So, it provides a very complimentary product line and allow us to offer complete solutions to customers across many layers of the network hierarchy.
CAFFERTY: And Chameleon Technologies, what do they bring to the table?
RICKEY: Chameleon is an Orange County-based company where the average experience is about 13 years per engineer. And these guys have great high-speed design experience and actually have been doing some chips for us in the past. So, we have good knowledge of these guys. They have a great track record and they're very talented.
CAFFERTY: it sounds like you've got lost of reasons to be optimistic and certainly the latest earnings report is just one of them. Mr. Rickey, thanks a lot for being with us this morning.
RICKEY: My pleasure. Thanks for having me.
CAFFERTY: David Rickey, CEO and president of Applied Micro Circuits from San Diego.
FOR A COMPLETE WASTE OF YOUR HARD-EARNED BOOTY (i.e., TO ORDER A VIDEO OF THIS TRANSCRIPT), PLEASE CALL 888-CNNFN-01 OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT WWW.FDCH.COM |
