Applied Micro Circuits (AMCC)

Revenues from storage products grew 12% sequentially

SUNNYVALE, Calif., —January 30, 2007—Applied Micro Circuits Corporation [NASDAQ: AMCC] today reported its financial results for the three and nine months ended December 31, 2006.

Net revenue for the third quarter of fiscal 2007 was $76.6 million compared to the $76.4 million reported in the second quarter of fiscal 2007 and $65.2 million reported in the third quarter of fiscal 2006.

The net loss on a generally accepted accounting principles (GAAP) basis for the third quarter of fiscal 2007 was $4.2 million or $(0.01) per share, compared with a net loss of $13.9 million or $(0.05) per share for the second quarter of fiscal 2007 and net income of $584,000 or $0.00 per share for the third quarter of fiscal 2006.

The non-GAAP net income for the third quarter of fiscal 2007 was $9.0 million or $0.03 per diluted share, compared to the non-GAAP net income of $10.4 million or $0.04 per diluted share in the second quarter of fiscal 2007 and the non-GAAP net income of $4.8 million or $0.02 per diluted share in the third quarter of fiscal 2006.

Net revenue for the nine months ended December 31, 2006 was $222.7 million and increased 14.3% from the $194.9 million reported for the nine months ended December 31, 2005.

The GAAP net loss for the nine months ended December 31, 2006 was $18.9 million or $(0.07) per share, compared to the GAAP net loss of $10.0 million or $(0.03) per share for the nine months ended December 31, 2005. The non-GAAP net income for the nine months ended December 31, 2006 was $27.5 million or $0.10 per share, a 133% increase compared with the non-GAAP net income of $11.8 million or $0.04 per share for the nine months ended December 31, 2005.

“The communications market weakened throughout this quarter due to inventory corrections and industry consolidations. Revenues were disappointing but we managed on-going expenses well. Storage revenues showed strong sequential growth since we executed our initiatives to enhance our product portfolio and channel partners,” said Kambiz Hoosmand, president and chief executive officer.

AMCC reports its financial results in accordance GAAP and also provides additional financial data that have not been prepared in accordance with GAAP. The non-GAAP results and other financial measures reported by the Company exclude certain items that are required by GAAP, such as restructuring charges, amortization and impairments of purchased intangibles and goodwill, acquired in-process research and development charges, stock-based compensation charges, litigation settlement costs, realized gains on strategic equity investments, payroll tax on certain stock option exercises and expenses related to stock option investigation. Expenses related to the stock option investigation consist primarily of fees paid to professional service firms in connection with the Company’s internal investigation of historical stock option grant practices and the resulting restatement of the Company’s financial statements, the investigations by the Securities and Exchange Commission and the U.S. Attorney’s office arising from the internal investigation and the defense of derivative lawsuits arising from the Company’s internal investigation. Income taxes are adjusted to an estimated non-GAAP effective tax rate. These non-GAAP measures are not a substitute for GAAP measures and may not be consistent with the presentation used by other companies. The Company uses the non-GAAP financial measures to evaluate and manage its operations. The Company is providing this information to allow investors to perform additional financial analysis and because it is consistent with the financial models and estimates published by analysts who follow the Company. The attached schedule reconciles non-GAAP results and other financial measures reported by the Company with the most directly comparable GAAP financial measures.