Applied Micro Circuits (AMCC) earlier reported revenues of $49.2 million from continuing operations in the second quarter of 2009, up 9% sequentially but down 23% year over year. The company earlier sold off its 3ware storage adapter solutions business to LSI Corp. (LSI) for approximately $20.8 million.
The company had expected that the acquisition of 3ware storage adapter solution business (in 2004) would strengthen the company’s position in SATA based RAID controllers. However, management stated that the customer base, the product requirements and the business dynamics have not converged with its semiconductor solutions. Hence, it decided to sell this business. The company will now focus on its data center, enterprise and telecom businesses.
Gross margin came in at 60% compared to 58.5% in the previous quarter and 71% in the year-ago quarter. Earnings per share came in at 2 cents easily beating the Zacks Consensus Estimate of a loss of one cent. The company ended the quarter with cash and equivalents of $198 million and no debt.
As of Sep 30, 2009, inventories were $19.5 million, down from $26.6 million on Mar 31, 2009. Over the past year, Applied Micro Circuits has undergone a number of management and product transitions. In order to lower operating expenses, the company has reduced its workforce by 17%.
The overall restructuring should position the company to enter a period of sustainable revenue growth as newer products move in for production at key original equipment manufacturers and supply chain challenges get ironed out with signs of economic recovery. The company has also been diversifying into the storage and embedded markets.
In addition to becoming less dependent on the communications market, the company believes that it can exploit these diverse sets of expertise and introduce compelling new products. However, till we see sustainable improvement in the AMCC model, we will stay on the sidelines.
Headquartered in San Diego, California, Applied Micro Circuits is a leading provider of high-bandwidth integrated circuits (ICs) for optical telecom networks.
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