Earnings Report
Applied Micro Circuits Corp. (AMCC) (Nasdaq:AMCC) Wednesday reported its financial results for the second quarter ended Sept. 30, 1998.
Net revenues in the second quarter of fiscal 1999 were $25.1 million, an increase of 38 percent over the $18.2 million reported in the second quarter of fiscal 1998.
Pretax income for the second quarter of fiscal 1999 was $7.6 million, an increase of 155 percent over the $3.0 million reported in the second quarter of fiscal 1998. Net income for the second quarter of fiscal 1999 was $4.9 million, or 20 cents per share, compared with $2.9 million, or 16 cents per share, for the corresponding quarter of fiscal 1998.
The net-income and earnings-per-share numbers reflect an increase in fiscal 1999 of AMCC's effective tax rate to 36 percent from fiscal 1998's rate of 3 percent. Additionally, these earnings-per-share numbers, which represent diluted earnings per share, reflect the weighted average increase in shares associated with the company's public offerings in the second half of fiscal 1998.
Sequentially, net revenues for the second quarter of fiscal 1999 increased 6 percent over the $23.7 million reported in the first quarter of fiscal 1999. Net income for the second quarter was up 20 percent from $4.1 million, or 17 cents per share, in the first quarter of fiscal 1999.
For the six-month period ended Sept. 30, 1998, net revenues were $48.8 million, an increase of 39 percent over the $35.2 million reported for the corresponding period of the prior fiscal year.
Pretax income for the first six months of fiscal year 1999 was $14.0 million, an increase of 129 percent over the $6.1 million reported in the first six months of the prior fiscal year. Net income for the first six months of fiscal 1999 was $8.9 million, or 36 cents per share, compared with $5.9 million, or 32 cents per share, in the first six months of the prior fiscal year.
Commenting on the results, Dave Rickey, president and chief executive officer of AMCC, said: "We are continuing to execute on our strategic plan. Our operating margin continued to improve, driven by an expanded gross margin, which was 62.8 percent in the most recent quarter.
"Among the products we introduced was the S2060, a transmitter and receiver chip for use in high-speed Gigabit Ethernet applications. This is yet another product delivering gigabit and higher performance, using low-cost, low-power CMOS process technology.
"Our customers are enthusiastic about these CMOS solutions because they provide superior performance with all the cost and integration benefits of CMOS. Our silicon process technology strategy that encompasses CMOS, Bipolar and Silicon Germanium has been well received by our customers.
"Last quarter, we announced an important long-term agreement with IBM that provides AMCC with advanced access and use of Silicon Germanium (SiGe) process technology. We anticipate that this process will allow us to develop high-speed solutions for SONET OC-192 (10Gbps). We have already started our first product designs using this key process technology."
Rickey continued: "During the past two months, there has been considerable investor concern about telecommunications stocks, caused by announcements from certain equipment suppliers of weakness in portions of their business. There is also concern about global economic uncertainty.
"While these are valid concerns that heighten our alertness for indicators that may affect AMCC's outlook, we are focused on broadband, fiber-optics-based systems and have not seen anything in our customers' order patterns that suggests a softening of demand for our communications products.
"While we cannot predict or control these macroeconomic factors, we are confident in our strategy of addressing the need for increased bandwidth, which is being driven by increased Internet usage, remote network access, cellular and facsimile communications, and video conferencing."
Second-Quarter Highlights
-- Received final $10.8 million portion of a last-time buy order
from Raytheon/Hughes for ICs utilized in its high-speed radar
systems; -- Signed long-term agreement with IBM for access to Silicon
Germanium process technologies, and began product development in
this technology; -- Introduced the S2091, a 2.5 Gbps port bypass circuit for use in
SONET WDM, Fibre Channel Arbitrated Loop and HDTV applications; -- Introduced the S2060, a single-channel CMOS Gigabit Ethernet
transceiver; -- Continued to ramp OC-48 design-ins; -- Continued to increase manufacturing output.
AMCC's Market Opportunity
"We are executing on our vision to be the premier supplier of high-bandwidth silicon connectivity for the world's communications infrastructure," said Rickey. "We believe demand for our communications standard products continues to grow as the need for bandwidth expands, due to the increasing demand for Internet access and high-bandwidth LAN/WAN data and video transmission."
AMCC is focused on the fiber-optics-based, high-performance communications market that is being driven by increasing demand for greater bandwidth to accommodate growth in the Internet, the World Wide Web, and cellular and facsimile communications, as well as applications such as remote network access, video conferencing and higher-speed, data-intensive communication between local-area networks.
The company's products serve these wide-area-network (WAN) and local-area-network (LAN) applications. For telecommunications markets, the company's products address the SONET/SDH and ATM transmission standards, and for data-communications markets the company offers products that address the Gigabit Ethernet, ATM and Fibre Channel transmission standards.
AMCC's Technology Strategy
The company uses its internal bipolar and BiCMOS manufacturing processes together with advanced CMOS processes from external foundries to provide cost-effective solutions to its customers. Additionally, the company has commenced designing products using an advanced silicon germanium process.
These multiple silicon process technologies, combined with the company's extensive mixed-signal design capability and its system expertise, provide the core capabilities that the company believes give it a competitive edge in servicing the high-performance communications market.
For more information about AMCC, visit the company's Web site on the Internet at amcc.com.
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