This excerpt taken from the AMCC 8-K filed Nov 16, 2006.
Seogju Lee - Goldman Sachs - Analyst
Kambiz, just as we look at your prospects as we head into calendar 2007, just any preliminary thoughts about the opportunities in your traditional telecom business, both the core as well as what you have been branching out into more on the access as well as the metro side?
Kambiz Hooshmand - Applied Micro Circuits Corporation - President, CEO and Director
We think that we are in a period where the overall envelope of spending on telecom infrastructure related to packet technologies is growing quite nicely. So let me caveat that at the expense of giving you a long answer.
© 2006 Thomson Financial. Republished with permission. No part of this publication may be reproduced or transmitted in any form or by any means without the prior written consent of Thomson Financial.
Nov. 09. 2006 / 2:00PM PT, AMCC - Q2 2007 Applied Micro Circuits Corporation Earnings Conference Call
CapEx is a very complex topic relative to telecom infrastructure, and it involves a number of components. First of all, one half of it, approximately one half of it is related to labor costs that the telecom providers capitalize. So that you have to take out, because obviously were not in that business were not in the service business. The other half is the equipment. And that half has been growing actually in single digits. But if you further subdivide that half into the half that into the portion that is focused on IP Ethernet and packet technology, that area is growing in the 15% to 20% range. And in fact, yesterday, as part of Ciscos announcement, they announced that their routing technology has grown 13% year-over-year. So we think that the area of the CapEx that were focused on is in for a long haul growth, long haul meaning three to five years, as far out as we can see, of 15 to 20 years. So we are positioned pretty well in transport products and even processors, communication processors that go into telecom infrastructure.
And at this time, we have no more questions left in the queue. Mr. Dawson, I would like to turn the conference back to you for concluding remarks.