NEW YORK (TheStreet) -- Shares of Applied Micro Circuits (AMCC) were falling 5.6% to $5.81 Friday following the announcement that CFO Douglas Ahrens will resign from the cloud infrastructure and data center company.
Ahrens will leave Applied Micro Circuits on August 21, 2015 to pursue a CFO position at a privately-held company in the software industry.
Applied Micro appointed Karen M. Rogge as interim CFO commencing August 24. The company has retained a search firm and is in the process of identifying a permanent successor to Ahrens.
Analyst firm FBR viewed Ahrens' departure "as a meaningful negative," according to Barron's.
"Mr. Ahrens played a key role in instituting and enforcing the cost-cutting program that was essential to conserving the company's cash balance of just $77 million (we believe the company needs at least $30 million to $$50 million to maintain working capital)," FBR analysts wrote. "While Karen Rogge appears to be a stop-gap candidate, it will be challenging to find an equivalent and permanent CFO willing and capable to make the tough decisions needed to see this company successfully through transition."
TheStreet Ratings team rates APPLIED MICRO CIRCUITS CORP as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
"We rate APPLIED MICRO CIRCUITS CORP (AMCC) a SELL. This is driven by several weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity and generally disappointing historical performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, APPLIED MICRO CIRCUITS CORP's return on equity significantly trails that of both the industry average and the S&P 500.
- AMCC has underperformed the S&P 500 Index, declining 24.26% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
- AMCC, with its decline in revenue, underperformed when compared the industry average of 10.6%. Since the same quarter one year prior, revenues fell by 24.8%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- The gross profit margin for APPLIED MICRO CIRCUITS CORP is rather high; currently it is at 60.42%. Regardless of AMCC's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, AMCC's net profit margin of -19.58% significantly underperformed when compared to the industry average.
- APPLIED MICRO CIRCUITS CORP has improved earnings per share by 47.0% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, APPLIED MICRO CIRCUITS CORP reported poor results of -$0.66 versus -$0.10 in the prior year. This year, the market expects an improvement in earnings (-$0.10 versus -$0.66).
- You can view the full analysis from the report here: AMCC Ratings Report