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To: Mark Fowler who wrote (109937)	10/12/2000 11:54:37 AM
From: H James Morris	Read Replies (2) \| Respond to of 164684

Mark, you still holding AMCC? Considering this ugly tech sell-off its held up very well...don't you think. Btw Another split coming.;-) >October 12, 2000 Like a ship that somehow planes through a storm-tossed sea, San Diego-based AMCC yesterday reported extraordinary growth at a time of dizzying volatility among semiconductor manufacturers. For the second quarter ended Sept. 30, AMCC said its sales and net income more than doubled over the same period last year. Excluding one-time costs, AMCC's earnings were 26 cents a share -- topping Wall Street's estimates by 3 cents. AMCC also unveiled a 2-for-1 stock split. Officially known as Applied Micro Circuits Corp., the company makes silicon chips used to route data on fiber-optic networks. In August, AMCC announced plans to buy another communications chipmaker, Sunnyvale-based MMC Networks, in a stock deal then valued at $4.5 billion. AMCC said its net income climbed to $23.6 million, or 17 cents a share, from $9.1 million, or 8 cents, in the year-ago quarter. Excluding costs for acquisitions and stock-option taxes, the company posted a profit of $35.7 million, or 26 cents a share. Revenues were $97 million, a 156 percent increase from the $37.9 million in the second quarter the previous year. "On the surface, the numbers look very, very solid," said Jim Chen, a portfolio manager at Roger Engemann & Associates, which owns about 1.1 million shares of Applied Micro. He cited increasing profit margins and the fact that sales and earnings exceeded analysts' forecasts. Yet AMCC's strong financial performance seemingly defied a variety of forces. AMCC executives told analysts yesterday that revenue from their biggest customer, Canada's Nortel Networks, has declined dramatically this year. In March, sales to Nortel represented 43 percent of AMCC's revenue. In the quarter just ended, however, Nortel sales accounted for only 20 percent of AMCC's total revenue. As AMCC chief executive Dave Rickey put it, "That usually means your company has tanked. Yet we have the fastest sequential growth rate in the industry that I know of." The company managed the feat by selling more of its chips to other customers, including Alcatel SA, Cisco, Hitachi Ltd. and JDS Uniphase Corp. AMCC's second-quarter sales increased 31 percent from its first quarter, which gained 30 percent over the previous quarter. Rickey said the only other chipmaker showing comparable growth is PMC-Sierra, which is expected to report its third-quarter results today. "We were expecting a 20-percent increase on the top line (sequentially), and they reported a 31-percent increase, so they beat even the highest estimates," said Karl Motey, analyst with C.E. Unterberg, Towbin. AMCC and other communications-chip manufacturers have benefited from strong demand for ever-faster Internet connections. Intel, on the other hand, has suffered from slower growth in personal computer sales. "A leader in need is a leader indeed," said Arun Veerappan, who follows AMCC for Robertson Stephens in San Francisco. "These guys have executed well, they've managed their business very well." The chart for AMCC's stock also shows a steady rise over the past year -- in dramatic contrast to the volatility for Intel, IBM, Lucent, Motorola and other semiconductor stocks. Reported shortages of key components hammered the sector again yesterday, and Rickey emphasized that constraints on supplies used by AMCC to make its chips now represent the biggest risk factor. "The big concern now for investors should be the supply situation," Rickey said. "There is absolutely a risk to investors on the supply side." Yet Rickey also voiced confidence in AMCC's ability to manage the supply issue and "pull off numbers to our satisfaction." Investor fears that reported shortages affecting IBM drove down the price of AMCC shares in regular trading yesterday by $10.95, or more than 6 percent. IBM makes materials and chips for AMCC under contract. AMCC closed at $167.73 in Nasdaq trading that was more than double the company's recent daily average. The company reported its financial results after the close of regular U.S. trading. AMCC shares rose in after-hours trading to $176.25.