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To: Johnny Canuck who wrote (33070)	6/26/2001 5:48:45 AM
From: Johnny Canuck	Respond to of 70386

17:46 ET ****** Applied Micro (AMCC) 14.20 +0.34: You can say this much for CEO Dave Rickey's delivery of the bad news today: he didn't sugarcoat it. A warning in the communications IC group is hardly shocking, but once again we are faced with an unsurprising warning of surprising magnitude. AMCC's revenues will fall to $40-45 mln in Q2 -- that's roughly a 65% plunge in just one quarter and 70% since the Dec qtr. The company now expects a loss of 4-6 cents vs consensus of breakeven. As a rough guide to the extent to which analysts were surprised by the magnitude, note that Goldman Sachs was ahead of this announcement with its reduction in estimates last week to $60 mln in revenues and a penny loss. In addition to the ugly numbers, Rickey had stern words to analysts about pinning their hopes on a "slower pace of cancellations." Anyone watching tech stocks this year knows that phrase well. It is the phrase that has launched a thousand rallies. Applied Micro, like many other tech firms, has indeed seen a slower pace of cancellations in the Jun qtr. But unlike many other tech CEOs, Rickey wouldn't let analysts walk away with the notion that this was positive news. He attributed slower cancellations to the fact that the backlog of orders was simply smaller, and explicitly cautioned against using slowing cancellations as a reason for optimism. He noted that despite the lower absolute number, cancellations have not subsided and new orders remain weak. As a result, he said that he could not offer any tangible evidence that revenues would stabilize this year. Note the use of the word stabilize as opposed to rebound -- a meaningful rebound didn't even appear to be a consideration. Despite all of the talk that an AMCC warning was forthcoming, the stock still traded down by a point after hours to 13.10, which speaks to the magnitude of the warning. Beyond the immediate and obvious implications for other comm IC companies such as PMCS, VTSS, BRCM, and TXCC, there is the broader message for technology investors: a slowing pace of order cancellations is not necessarily good news. If it was, then it would be great news if orders hit zero. Think about it. - Greg Jones, Briefing.com