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Applied Micro Q3 Earnings Match, Revs Beat

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Applied Micro Circuits Corp’s share price decreased 7.9% to $11.98 on Oct 25 though it rebounded to profit on non-GAAP basis in the second-quarter of fiscal 2014. Excluding non-recurring items, non-GAAP net income for the quarter was $2.0 million or 3 cents per share versus a net loss of $10.5 million or loss of 16 cents per share in the year-earlier quarter. Non-GAAP earnings were in line with the Zacks Consensus Estimate.

However, on GAAP basis, Applied Micro reported net loss of $32.4 million or 45 cents per share in the quarter ended Sep 30, 2013 as compared with net loss of $21.6 or 33 cents per share in the year-ago quarter.

Quarter Details

Net revenues for the second quarter were $55.4 million versus $46.3 million in the year-ago quarter. Net sales marginally surpassed the Zacks Consensus Estimate of $55.0 million.

Geographically, sales to North America represented approximately 44% of total revenue while Europe contributed 21%. Sales to Asia contributed 35% in the reported quarter

Operating expenses stood at $66.7 million versus $48.5 million in the year-ago quarter. Selling, general and administrative expenses stood at $9.1 million versus $13.5 in the year-ago quarter. Research and development expenses were $56.5 million versus $34.4 million in the prior-year period.

Applied Micro ended the quarter with cash, cash equivalents and short-term investments of $76.0 million versus $89.7 million as of Jun 30, 2013. Net cash used in operating activities stood at $35.4 million for the six months ended Sep, 30, 2013, versus $28.2 million in Sep 2012.

During the reported quarter, Applied Micro entered into a formal arrangement with a software partner to produce the world's first commercial grade enterprise distribution for ARM 64-bit servers.  


Applied Micro expects to continue its healthy revenue momentum with new product introductions in the coming quarters.

The company expects that the embedded computer products will continue to generate solid revenue growth in the next 18 to 24 months as it transitions to X-Gene based embedded products.

Total revenue is expected to be in the range of $53 million to $57 million in third quarter fiscal 2014.  Non GAAP operating expenses is expected to range from $31.0 million to $32.0 million in the next quarter.

Applied Metro currently has a Zacks Rank #3 (Hold). Other stocks that look promising and are worth considering in the industry include Freescale Semiconductor, Ltd. , Cirrus Logic Inc (CRUS - Free Report) and Alpha & Omega Semiconductor, Ltd.  (AOSL - Free Report) . While Freescale and Cirrus carry a Zacks Rank #1 (Strong Buy), Alpha & Omega carries a Zacks Rank #2 ( Buy).

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