This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

JPMorgan Tech Conference: Applied Micro Doesn't See Any Second-Half Heroics for Tech

We didn't even have to buy the CFO of Applied Micro Circuits (AMCC) a beer.

Bill Bendush was more than graphic in describing the communications equipment spending clampdown that sucker-punched his upcoming first quarter results. Last week AMCC met Street fourth-quarter expectations, but warned that revenue would fall 42% in the first quarter to follow. This week he got to face the JPMorgan H&Q crowd. How bad is it, Bill?

It's really (insert your expletive here) bad. Let him count the ways:

The inventory buildup among AMCC's key communications customers has cut business to zero. Forget about order delays. "We don't have any backlog. How many more orders can they cancel?!" Bendush deadpanned about his empty nest. Bendush says business cut out halfway through the last quarter -- enough so that he's got his marketing team to go back to mid-1999 revenue levels, draw a straight line to the first-quarter forecast and calculate growth levels. The Street is going to have to acclimate itself to growth in the high teens vs. those spectacular high-30% performances from 2000.

This could take some getting used to.

And no, price pressure will have nothing to do with it. If only AMCC was that lucky. "To date I have not seen any pricing requests from customers, any pricing pressure. Maybe that's because they're not placing any orders," he said.

Enough inventory madness! When does he expect his customers to work through what they've got and buy products again? Four to six months, he says, using internal numbers put together six weeks ago. The trouble there is that in those six weeks, Bendush's gut tells him that number has stayed the same. "It feels to me like it's probably the same thing," he says. That's four to six months of inventory, starting now. "We're not making any breathing room." Many of those design wins from last year just may not get made, after all.

So how can this be the bottom? Bendush admits that AMCC's estimates that June will be the bottom are culled from nothing but anecdotes and the words of Street-doubted customers such as Nortel (NT). "I believe June will be the bottom, but we're not expecting great things in September," he says.

In other words, he's got no visibility, which he translates as "another way of saying 'poor orders.'"

No second-half 2001 comeback here. It's time for that beer.

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,001.22 -38.27 -0.22%
S&P 500 1,988.40 -3.97 -0.20%
NASDAQ 4,538.5510 +6.4470 0.14%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs