AMCC CC:
Rev 41.3 mil flat Q-Q
In Sept q, two > 10 percent customers CSCO and NT 15 and 12 percent
Booking in Sept 13.7 mil, all 3 months positive
MMCN BTB 1.0, saw weakness here first so this is a positive
12 MONTH BACKLOG 71.6 MIL, 41.9 mil ship in next 3 month, 53.5 mil in next 6 months
GM up to 57.9 from 54.0 percent Q-Q due to reduced internal manufacturing cost, no pricing pressure
R+D 15.9? percent up 2 percent
Int Income 19.2 mil,
Assume 11.5, 10.7 amd 9.5 mil in the next few Q due to lower rates
Tax rate 42.0 percent , same rest of year
11.2 mil in re-structuring charge
Cash 1.117 bil, down 35.45 mil
Cash flow negative 11.8 mil
Turns down to 3.3 from 3.7
DSO 46 down from 47 Q-Q
Shares out reduced by 3.7 mil, 299 mil shares out,
Improvement in net booking indicate bottom of business,
same backlog as last Q though
focusing on leaning company, will tighten further
-cancelling 2 projects and slowing down 1 other
-R+D down in Sept Q rather than increase as indicated before as a result
-In Sept taped out 13 new chips, ship 9 more new and starte 8 new designs
-Expecting more GM improvement through cost controls
-expect bottom to last longer than expect
-recovery driven by new products due to need to get more return on equipment
-outsourcing should drive growth
-metro market will drive growth
-10 gigE and OC192 will drive growth
-180 OC192 frame and FIFO wins in the last 18 months
-275 OC48 wins in 100 accounts
-New 10 gig transceivers announced recently
-Second SiGe OC768 product
- decline in Cap Ex decreasing development activities
- last Q all time record design wins MONI, Fujitsu, NT, CSCO, LU
-Of deals closed in Q, win rate 90 percent, not closed in Q in lead position
-weekly sales and marketing meeting to try to beat competition
-consolidation increasing due to length of down turn
-consolidation of chip companies will accelerate as they run out of cash and large companies are unable to buy them out
-gained momentum this Q
-Stock option exchange program, options worthless for most,
Business overview:
order not as strong this q
believe we are at the bottom, inventory levels, still a 5 month supply, in first H of 2002 we will see a step function due to re-stocking alone
Backlog decline to 16.7 mil last Q, backlog from these 10 top customer drop to 4.6 mil, thought it could not fall more but it did
In Q3 rev flat to Q1 and Q2.
still seeing cancellations and push outs
r+d AND sg+a WILL drop 1 mil
GM will increase 1 percent
R+D expense at other companies still high so trend to outsource still there.
Q: Pricing? No change?
A: No material effect on margin. Only change change due to mix.
Q: Areas of strength?
A: At rev level, everything did not do very well. No trends.
Q: Earlier in Q had increased activity with customers? Results?
A: Customers seeing bottom with their customers. No increase activity.
Q: Changes due to Sept 11.
A: No change.
Q: Which programs cancelled?
A: No strong customer demand. No layoffs. Re-allocated. No specifics.
Q: BTB low. With flat backlog, it will run out. When will we see BTB > 1
A: Turns business will have to improve dramatically to improve BTB. Turn business were 30 percent. To get BTB above 1.0, we need significant turns. Artificial low shipment levels due to large inventory in channel.
Q: Net bookings?
A: To get BTB of 1.0 and backlog then had 30 percent canellations and push out.
Q: Push out supporting back log? What type of customers? Telecom or datacom?
A: No specific conclusions? many areas.
Q: Steps to prevent some sort of problem of lack of inventory being used up?
A: No guarantees. trying to be conservative
Q: Ramp of key customers on MMCN side?
A: Return of CSCO business. Across the board increase. Little here and there. Still at low level. Pattern more normal. Less backend load. BTB Near 1.0 for that part of business.
Q: Linearity. 30 percent turns. Most front end weighed.
A: Through the Q.
Q: Inventory was up in dollar terms? Planned?
A: Up a little , but will manage down over next few Q's.
Q: Shipping at artifically depressed level. What levels will we see when the correction is over.
A: 70 to 80 mil more nature run rate.
Q: VSR development for high speed interconnects. Updates.
A: 2 new device for very short range. Parallel fiber market.
View mixed signal area as a nature place for us. We are a leader there.
Q: Design activities, platforms of most interest, products customers are most excited about?
A: Frames, FIFO all saw good design win in the metro market.
Q: Inventories written down? Disposed of?
A: No change from last Q. Not used up. Will not see need for it for 12 months.
Q: MMCN business. Rev and design wins. LANs vers WANs.
A: All WAN's.
Q: IP or ATM?
A: Can do both.
Q: New designS, standard G.79 or want custom algorithms?
A: Seeing both
Q: Design wins and how they are surviving during the down turn?
A: Past design wins, saw some customers go out of business, some have reduced life time value, some no logner viable, winning new ones
Q: After 5 month inventory, grow above that after correction.
A: have latent share gains as rev comes back, against internal program as well as competitors, doing well on framers, FIFO still strong, processor still a ways out
Q: OC192 win 275 at 100 customers?
A: Core depressed. Can not do calculation of future rev.
Q: 70 to 80 mil run rate after correction. Cap Ex reductions.
A: Carriers cap ex could be as low as 50 to 60 bil. We shoudl still fair well.
Q: Doing well in network processor space by customer satisfaction? Color?
A: Can scale and add functionality without adding hardware. Compelling to customers. MMCN has traction. It is harder to do then thought. A lot of start up have gone out of business.
Q: 3 month shipable back log. When does most ship by month.
A: No idea.
Q: Framer business. How is it doing in long haul. Cap Ex coming down. Outsourcing increase. Net effect?
A: All lines down. Hard to determine what is inventory related and what is demand related.
Q: Slow down in OC192 and OC768.
A: Small guys slowed down. Big guys doing it to gain presence. Do not expect production volumes till 2003.
Q: Why 90 percent win rate?
A: Focusing on market leaders.
Q: NT reports that they are not giving guidance. Demand zero.
A: Do not think so. Think they just do not like the answer, does not mean no visibility.
Q: CEO buying shares.
A: 160,000 shares on open market.
Q: Break even point?
A: reduced spending in R+D and SG+A reducing break even. maybe low 80 rather than mid 80 mil.
Q: Options?
A: will be
Q: Technology road map. Frammer area has been strong historical. Color?
A: Layer is critical. Virtual concatenation is important technology. Will be over next few Q's.
Q: 30 percent cancellation and push outs. Accelerated?
A: Cancellations did slow. More push outs. No numbers on percent of backlog.
Q: Nominal pick up due to inventory correction end. With market share gains, what will be growth rates after?
A: 50 to 80 percent 2 years out.
Q: Design to production.
A: Design win take 12 to 18 months to complete and then will be good for 3 years.
Q: Design wins turning to rev quicker.
A: Still one year plus to do a design. Can not reduce.
Q: Competitor positioning in 10 megbit transceivers for SONET. How far ahead.
A: Strong position. Competitor saying a lot but we are not phased.
[Harry: Conditions are still terrible. They are trying to talk a good games, but the reality is there is little short term catalyst to get growth going again. Programs are still going on but the backlog many not offset the decrease in programs at equipment manufacturers. Design win rates are still high so they are not losing market share, but it is the share of a declining market. Lag in wins to production levels are hurting them since the backlog is being worked down. Without new production level chip to drive demand and replace the backlog these guys are in trouble. ] |
