AMCC's EPS Above Estimate, Rev Lags

Applied Micro Circuits Corporation(AMCC - Analyst Report) posted Non-GAAP net loss of $1.1 million in its third quarter of fiscal 2012, compared to a net income of $6.8 million in the previous year quarter and $1.1 million in the last quarter. Diluted EPS came in at (2 cents) per share compared to 10 cents per share in the year-ago quarter, beating the Zacks Consensus Estimate of (10 cents) per share.

Revenues

Net sales came in at $56.3 million, down 9.6% year over year and 13.2% sequentially. This did not meet the Zacks Consensus Estimate of $59 million but depicted that the company had been prescient about this in its previously provided outlook during its earlier quarter release.

Management averred its awareness of demand softness in the quarter which continues to get onerous due to the clouded macro environment. Recovery does not appear to be on the cards too soon until such fiscal pressures mitigate.

Margins

Gross margin (excluding amortization and compensation expenses) came in at 57.8% compared to 61.7% in the last year quarter and 57.3% in the previous quarter.

Operating loss for the quarter came in at $7.8 million, plummeting the operating margin to (13.8%) from (7.1%) in the previous year quarter and (3.2%) in the last fiscal quarter.

Balance Sheet and Cash Flows

Applied Micro ended the quarter with cash and cash equivalents of $117.3 million compared to $113.7 million at the end of the previous quarter. Inventories amounted to $17.6 million compared to $18.7 million at the end of the second quarter of fiscal 2012.

For the first three quarters of fiscal 2012, net cash used for operating activities were around $3 million and $11.9 million were spent on capital expenditures.

Outlook

The first ever 65-Bit ARM Processor was launched during the quarter, which is expected to prove momentous for the coming quarters. Moreover, management declared that it has been making advances on its system on chip (SOC) and other data center products which are expected to ameliorate the future business scenario for Applied Micro.

The formidable competitors for Applied Micro constitute some big players such as Entropic Communications, Inc. (ENTR - Snapshot Report), Cirrus Logic, Inc. (CRUS - Snapshot Report) and Cabot Microelectronics Corporat (CCMP - Snapshot Report).