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Applied Micro Plans to Get Even Smaller

The communications chipmaker will get rid of about a third of its staff.

Applied Micro Circuits

(AMCC)

said it will slash its workforce by nearly a third by the end of 2003, blaming the cuts on soft end-markets for its products.

The company sells chips to communications equipment manufacturers such as

Nortel

(NT)

and

Cisco

(CSCO) - Get Report

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.

AMCC hasn't posted a profit since September 2000.

Over the past two years, AMCC sales have dropped a stunning 85% from their peak. Less than a year ago, in July 2002, the company laid off 25% of its staff, or 275 employees.

Under the newly announced plan, AMCC will cut its staff from 912 to about 626 employees by the close of the calendar year, though most of the layoffs will take place by the end of June. Combined with a previously announced closure of a wafer fab and the consolidation of other facilities, AMCC hopes to save $35 million to $40 million a year in operating expenses.

Related charges will show up in financial results for the March, June and September quarters, though AMCC said it hasn't yet determined the exact amount of the costs.

"The extended industry downturn has led AMCC to take action which will enable the Company to return to profitability more quickly," said CEO Dave Rickey.

Given the dim outlook for communications equipment,

chipmakers may not see the light anytime soon. But many find comfort in their hefty cash cushions. AMCC is better-positioned than any of its rivals, with about $1 billion in cash and short-term investments.

After the close, AMCC shares dipped 2 cents, or 0.6%, to $3.32.