QUOTE AND NEWS
Motley Fool  Nov 29  Comment 
X-Gene generated minimal revenue and severely damaged Applied Micro's profitability.
Motley Fool  Nov 23  Comment 
This chipmaker sells out ahead of the launch of its next-generation ARM server processors.
Benzinga  Nov 22  Comment 
  Sandler O'Neill downgraded BNC Bancorp (NASDAQ: BNCN) from Buy to Hold. BNC Bancorp shares closed at $30.70 on Monday. Goldman Sachs downgraded FireEye Inc (NYSE: HW) from Neutral to Sell. FireEye shares closed at $13.13 on...
Benzinga  Nov 22  Comment 
The following are the M&A deals, rumors and chatter circulating on Wall Street for Monday November 21, 2016. Unconfirmed Takeover Chatter in Lending Club The Rumor: Shares of LendingClub Corp (NYSE: LC) spiked higher Monday on...
Motley Fool  Nov 21  Comment 
The circuit and microchip maker got a flattering offer.
MarketWatch  Nov 21  Comment 
Applied Micro's stock soars 11% premarket after Macom buyout bid
MarketWatch  Nov 21  Comment 
Macom Technology Solutions Holdings Inc. announced Monday an agreement to buy cloud infrastructure company Applied Micro Circuits Corp. in a cash and stock deal that values Applied Micro at about $722.7 million. Under terms of the deal, Macom...




 
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Applied Micro Circuits Corporation (AMCC) designs and manufacturers integrated circuits for enterprise and telecom industry customers. In the consumer and small business space, the company provides stand-alone semiconductor solutions using its software and system-level expertise. Once a multi-billion market capitalization company in the dot-com boom, AMCC now is a much smaller company. The fast-growing telecommunications segment and surging demand for broadband bandwidth, especially in 3G/4G infrastructure, is expected to benefit AMCC.

Business Growth

While Applied Micro Circuits Corp's earnings have increased from $0.07 to an estimated $0.15 over the past 5 quarters,[1] the company's earnings volatility-adjusted growth rates have decelerated quite strongly. Net operating cash flow almost doubled from fiscal 2010 to fiscal 2011, from $31.0M to $16.9M, reflecting continued growth in telecommunications sales.[1]

Trends and Forces

Booming demand for 4G to drive sales growth

As consumers increasingly expect to stay connected via their cell phones, tablets, and notebook computers, demand for higher bandwidth wireless networks has skyrocketed. While 4G mobile makes up only 0.33% of the wireless chipset market as of 2011, analysts expect the number to jump to 20% by 2014.[2] As a manufacturer of integrated circuits for both the telecommunications industry and consumer / small business end-user, AMCC is poised to benefit from this continued growth in wireless communication.

Cyclical nature of business poses risk

The semiconductor communications market is highly competitive and subject to rapid technological change. Companies generally face intense competition during the design stage, when customers decide which semiconductors to include in a planned device. However, once this stage is complete and the chips are designed, chipmakers enjoy long product cycles.[1]

Competition

About 5,000 companies operate in the US telecommunications industry, which has approximate annual revenue of $150 billion, although the top 50 companies hold more than 70% of total market share.[3] The industry is highly cyclical and subject to downstream supply/demand fluctuations and intense price competition. Geographically, manufacturers have shifted from North America to Asia to increase price savings.

Other major players include Intel (INTC), Texas Instruments (TXN), Micron Technology (MU), and Advanced Micro Devices (AMD).


References

  1. 1.0 1.1 1.2 Form 10-K AMCC 2011
  2. "Sequans (SQNS) to See Explosive Growth as 4G Catches On - Cramer" StreetInsider
  3. AMCC, theStreet analyst report
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