I copied the CNBC transcript for posterity.
Applied Micro Circuits (AMCC) President and CEO David Rickey with an earnings update
January 17, 2001
SUMMARY: Rickey explains the kind of chips that AMCC produces. He comments on optical routing. He says he is very happy with the company's fourth quarter earnings.
Mark: Applied Micro Circuits posting macro earnings, profit of 48 million dollars, 16 cents share for its third quarter. That's a 297% increase over last year, revenues up 213% to 143 million. Company adds that demand remains strong. Applied Micro trading around the 70 dollar market, a high of 79 and low of 32. Let's take a closer look at the number. And joining us is Dave Rickey, CEO of Applied Micro Circuits. Mr. Rickey, thank you for joining us.
Thank you Mark.
Mark: In layman's terms, what does your company make or do?
We make high-speed chips out of silicon that serve the high end of the network, the optical core. We sell to companies like Lucent, Cisco, Nortel, Alcatel. Those are folks who build the very large boxes that do the routing and switching of traffic and the aggregation.
Mark: So your chips can go into switchers and routers in an optical network. The future there and please correct me if I am wrong, all I know is what I read in "Scientific America" lately. Optical switching, optical routing, Bell Labs, part of Lucent, has some designs on the drawing board. Will these kinds of things decrease demand for your product or increase or have no affect?
We think they will increase demand. We think they are complimentary. We see the network today as being opto-electronic, a combination of optics and electronics. Over a period of time, part of the core of the optical network will probably go optical and will actually create demand for some of our products. Because not all function can be performed in optics alone. You need electronics to do some of the monitoring and the correction of the errors and things like that. So there is big business there for us.
Mark: The quarter report looks fabulous, you can't argue with triple digit gains. But your customers, the market you're selling into is having a rough time right now.
Lucent, Cisco, Nortel and people like that are experiencing something of a slowdown. Doesn't that have to work its way down to your part of the food chain sooner or later?
We did a good analysis, my marketing guys looked at the factors that are driving our growth. First of all, we have a great deal of customer diversification. So one year ago Nortel was 40% of our revenue. Yesterday we announced they were 18%. We now have 21 customers buying over million dollars of product a quarter. That number was only five customers a year ago. So there is great deal of diversification. There are four factors that are diving our growth. Because we have been asked how can you be growing so fast when the optical market is slowing down? And we very the answer in the form of four factors. Number one is while the cap-ex are slowing down, the optical core is growing about four times faster in terms of the annual growth than cap-ex in general. And we serve the optical core. Secondly, we are selling higher speed chips much like Intel, we do the same thing only we sell chips that run many gigabits per second. We are able to charge more money for that. The third one is we are getting more content. So through acquisitions, we are getting more and more of the chips that go into any given box at any given speed. And finally we are taking marketshare largely from our customers who used to do these designs. We analyzed the four factors because the average shareholder might review 100% of our growth is dependent only on the end market growth. And in fact 35% of our growth is dependent on the optical core, which is growing four times faster than the rest of the market. 18% is dependent on higher speed chips; 26% is dependent on higher content and 21% is dependent on taking marketshare. So, the good news for everybody is we have got four factors driving our growth, so any one factor alone does not have a huge impact on our growth rate positively or negatively.
Mark: Thank you, appreciate it. Dave Rickey, Applied Micro Circuits CEO.
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I had not seen the 21 customers over a million before. Must have have missed it.
Jack |
