To: Rob S. who wrote (1501 ) 4/25/2001 10:51:04 AM From: SJS Read Replies (2) | Respond to Applied Micro (AMCC) 22.57 -1.41: One of the most bearish calls this analyst can remember. This communication IC market is simply terrible. AMCC is the worst performing chip stock today after reporting in-line MarQ results, but guided down for JunQ on its call last night. After a solid January, the quarter "came unglued" after that. It got so bad, that the company had net negative bookings in March. Many had expected a negative call, but this had to be worse than expected as MarQ book-to-bill was only 0.47! JunQ revenue and EPS guidance were reduced to $70-$85 mln and $0.00-$0.02 vs First Call consensus of $100 mln and $0.07. The company said JunQ should be the bottom, but it cannot say that with too much certainty. Revenue is expected to decline roughly 40% this qtr with a 400 basis point hit to gross margin....The tone of this call was more bearish than competitor's PMC-Sierra (PMCS 36.32 -0.37) conference call last week wherein management seemed much more confident of a second half turnaround. The story is different at AMCC as numbers are falling perhaps steeper than at any other comm IC company because AMCC was later to see the changing demand picture. The bleak picture cannot be pinned on one particular product as business is weak across all product areas from physical to processors and OC-3 to OC-192. If you need a positive, design win success over the past 18 months should offset some of the weakness from current programs with new wins set to ramp in the second half of the year. Also on the positive side is the fact that the stock has doubled in a couple of weeks heading into the release meaning that any hint of a turnaround will result in a rally. Will the JunQ conf call be more positive? Cancellations so far in April were less than in March, but it's still early. If AMCC backs up meaningfully over the next month or so, Briefing.com expects another rally into the JunQ release. However, Briefing.com maintains its belief that companies in this industry and analysts following them are living on hope rather than reality. Demand is still falling, inventories are still rising, and the end-user customer base -- telecom service providers -- will be shrinking over the coming year. -- Robert J. Reid, Briefing.com
