Applied Micro Circuits Corp, a maker of chips for fiber-optic networking gear, reduced its fiscal first-quarter revenue forecast as much as 53 percent and predicted a loss after customer demand collapsed. The shares fell as much as 14 percent.
Revenue in the period ending Saturday will be US$40 million to US$45 million, the San Diego-based company said in a statement. The loss, excluding reorganization and other charges, will range from US$0.04 to US$0.06 a share, the company said.
In April, Chief Executive David Rickey said sales would be US$70 million to US$85 million, with profit of break-even to US$0.02 a share. The backlog of orders has dropped as customers cancel orders and take longer than expected to deplete an inventory glut, Rickey said in a statement. Customers have included Nortel Networks Corp. and Cisco Systems Inc.
"Clearly, business is horrible," said Robertson Stephens analyst Arun Veerappan. Rivals likely will follow with lowered forecasts, he said, while keeping his "buy" rating on Applied Micro because the company has US$1.1 billion in cash and short-term investments.
Applied Micro shares rose US$0.34 to US$14.20 in regular US trading, and fell as much as US$1.95 to US$12.25 following the announcement. They last traded at US$13.12. The stock had declined 81 percent this year. Shares of rivals Vitesse Semiconductor Corp fell as much as US$0.79 to US$16.61 and PMC-Sierra Inc slipped US$1.66 to US$26 in after-hours trading.
Applied Micro, Vitesse and PMC-Sierra have suffered from plunging demand for their semiconductors this year as phone and Internet companies buy less gear from the chipmakers' customers to build their networks.
In addition, Applied Micro probably won't be able to escape the drop in demand without eliminating jobs, Veerappan said.
In April, Rickey said the company wasn't planning to fire employees. Instead, hiring would be slowed, and spending on travel and temporary and contract workers would be cut, he said at the time.
On a conference call, he didn't say how the company planned to reorganize or cut expenses, and he wasn't immediately available for further comment.
On June 15, Nortel said it would have second-quarter sales of US$4.5 billion, down 42 percent from a year earlier. In Applied Micro's year-earlier quarter, the company had profit, excluding acquisition costs, of US$27.9 million, or US$0.21 a share, on revenue of $74.2 million.
Rickey and Chief Financial Officer William Bendush declined to give further details about the quarter until the company reports results July 18.
Rickey said he didn't know if any single customer generated more than 10 percent of revenue during the period. He also cautioned investors against interpreting the slowdown in canceled orders as a positive sign. On June 7, shares of rival Broadcom Corp. rose 13 percent after the communications-chipmaker said fewer customers canceled orders.
"There's such an inventory overhang that it clouds or masks any optimism," Rickey said on the call.
Applied Micro's quarterly revenue peaked at US$143.3 million in the quarter ended Dec. 31. The shares touched a record US$109.75 last September.
The company was expected to break even, excluding charges, based on the average estimate of analysts polled by First Call/Thomson Financial.
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