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Technology Stocks : Applied Micro Circuits Corp (AMCC)

AMCC 8.450

0.0%

Feb 3 4:00 PM EST

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To: MoonBrother who wrote (108)	12/15/1998 11:44:00 AM
From: Tim Michaels	Read Replies (1) of 1805

Nortel not using new products I heard the big reason the stock has been selling off is a rumor that has been going around the street that Nortel will not be using the new lineup of AMCC OC-48 parts. Nortel has a generic OC-48 Sonet interface that all Nortel communications systems use so Nortel is designing new systems but has decided not to redesign the generic OC-48 interface. The old OC-48 interface was designed in the early 90s and uses the TQNT GaAs solution at the high (OC-48) speeds and the AMCC solution at the slower speeds, after the signal has been slowed down to 311 MHz. The future of AMCC is based on displacing both GaAs with Si bipolar, and displacing ASICs with standard parts. Unfortunately, AMCC's biggest customer does not see the advantage in either of these directives. It is my understanding that the concern is that if AMCC's biggest customer, Nortel, is not redesigning its systems to use the new AMCC parts, then there must not be a big enough advantage with the new AMCC parts for Nortel to make a change. It would be like VTSS redesigning its new parts, and Lucent not seeing any advantage in the new parts to make a change (in fact VTSS has redesigned its parts to integrate functionality and LU has already adopted the changes). It is also my understanding that Nortel is using the old OC-48 interface design with new systems, and that AMCC is saying that it is designed into new Nortel systems, inferring "new designs" hence new AMCC parts. The problem with the Robbie Stephens response is it does not take into consideration that Nortel is 30% of the Sonet market, and that Nortel and Lucent is 60% of the Sonet market. Lucent obviously will not change from VTSS, so no Nortel means the company has to get the remaining 40% of the market. AMCC is missing out on a BIG part of the Sonet market. The OC-48 market is the growing part of the Sonet market. Tim

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