Applied Micro News Hits Competitors

Some days it seems as if it's all bad news in the semiconductor sector.

Communications chip company

Applied Micro Circuits

(AMCC)

now has chimed in, saying that order delays and cancellations during the past week have it concerned. The Monday announcement -- and an analyst downgrade Tuesday -- is knocking the stock down $8.50, or 13%, to $55.88 recently.

Tipping its hat to

Regulation Fair Disclosure

-- which requires companies to broadly disseminate material information -- Applied Micro Circuits said Monday night in a statement that it's sticking to quarterly revenue guidance it made during its Jan. 16 conference call, but it's also concerned about a potential new trend.

"If these cancellations are merely a blip and not a trend at AMCC, we expect to meet or beat expectations. However, given concerns that abound in our end markets, we are on alert," Dave Rickey, the company's CEO and president, said in a statement.

Analysts expect the company will earn 17 cents a share on $164.9 million in revenue in its fiscal fourth quarter ending in March, according to

First Call/Thomson Financial

.

Applied Micro Circuits makes chips used in communications applications. That sector has seen some inventory build-up during recent months -- similar to what's happened in the personal computer sector -- and now it's unclear how long it'll take before those inventories start burning off.

Rickey released the statement ahead of a planned appearance at a

Banc of America Securities

conference in San Francisco. He's the keynote speaker during Tuesday's lunch. His speech will be broadcast on Applied Micro Circuits' Web site in compliance with Reg FD, which the

Securities and Exchange Commission

put into play this past fall.

The Monday statement was all

Goldman Sachs

analyst Nathaniel Cohn needed to hear to downgrade the stock to market outperform from its recommended list rating. (Goldman hasn't done underwriting for Applied Micro Circuits.)

Cohn said that he believes the order cancellations are coming from several different customers and are across different products. But Cohn writes that his concerns are largely near-term, as the length of the order situation becomes apparent, and are related to the stock's valuation, which is the highest among its competitors. Applied Micro Circuits is trading at near 100 times fiscal 2001 earnings (estimated at 57 cents a share).

Competitor

PMC-Sierra

(PMCS)

is trading at a far lower 2001 earnings multiple of about 74 after having

drastically cut revenue expectations for 2001. Its shares were also hurting Tuesday, giving up $2.19, or 3.1%, to $67.56 recently.

Also caught up in the worries about a slowdown in the communications sector was

TranSwitch

(TXCC)

, recently down $4, or 8.6%, at $42.50.

Vitesse

(VTSS)

also was down, slipping 88 cents, or 1.3%, to $65.44.