Updated from July 20Shares of Applied Micro Circuits ( AMCC) fell nearly 10% Wednesday, a day after it reported results for the first quarter of fiscal 2005. Analysts used the word "cautious" to describe the company's near-term prospects, as AMCC digests a new acquisition and contends with an apparent inventory build in the communications market. The stock was recently off 38 cents to $3.55. Among Wall Street's concerns are integration challenges associated with AMCC's $200 million purchase of a PowerPC embedded chip portfolio from IBM, plus recent signs of a communications inventory build, said Pacific Growth Equities analyst Sandy Harrison. "Given the channel and customer challenges associated with the
Lehman likewise has an overweight rating on AMCC and hasn't done banking for the company. On Tuesday, AMCC bested expectations on sales and earnings in the first quarter of its fiscal year 2005. Quarterly net revenue totaled $67.4 million, more than triple last year's level of $20.5 million and slightly above the consensus estimate for $64 million. The company posted a net loss of $21.8 million or 7 cents a share, narrowing its year-ago loss of $53.4 million or 18 cents a share. On a pro forma basis, net income equaled $2.1 million or a penny a share, besting expectations for break-even results. In a prepared statement, CEO Dave Rickey said, "I am pleased that we were able to continue improving our pro forma profitability through sound execution of our existing business and the effective integration of our acquisitions."