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Technology Stocks : Applied Micro Circuits Corp (AMCC) -- Ignore unavailable to you. Want to Upgrade?

To: SJS who wrote (691)	9/29/2000 5:34:26 PM
From: A.L. Reagan	Read Replies (1) \| Respond to of 1805

Volume is easing up. Last time it dried up, 8/31 and 9/1, AMCC declined 10% the next two days. This is beginning to look "toppy" but OTOH, overall market is a drag. Some of the 9/30 YE fundies might start selling early next week to book profits in the new tax year. Forward guidance at earnings should be interesting. Kyocera official stated today they were seeing big demand from AMCC for KYO's ceramic packages - so AMCC is certainly still chugging out chips. AMCC has $8 per share in cash & equivalents, interest upon which represented 29% of last quarter's "pro-forma" operating income, or, tax-effected at their 34% "pro-forma" tax rate, fully diluted "pro-forma" eps without interest income would have been $.15, versus $.21 reported. The 6/00 release trumpeted a 33% quarterly sequential increase in "pro-forma" eps on a 30% increase in sales. Fortunately, interest income contributed its share to the growth, increasing quarter to quarter by 26%. So netting out cash and interest income, and assuming "pro-forma" operating income increases 30% each quarter, we have a twelve months forward eps of $1.20 ps (.194 + .252 + .327 + .426), so at $198 ps net of cash 12 months forward P/E is 165x; PEG = 1.375, assuming these halycon and pro-forma results continue unabated. I think it's fair to state this stock is "priced to perpetual perfection" with lots of favorable assumptions, almost all of which need to come true to support the current price. MMC looks to be quite a drag on pro-forma eps in the short-term. We will see in QE 12/00 and again in QE 3/01 with a full quarter of MMC. While MMC may or may not be dilutive to eps, it almost certainly will be dilutive to the growth rate of eps, wherein I believe lies the rub.