Applied Micro Q4 Earnings Beat Estimates - Analyst Blog

Applied Micro Circuits Corporation AMCC swung to profit on a non-GAAP year-over-year basis in the fourth quarter of fiscal 2014. Excluding non-recurring items, non-GAAP net income for the quarter was $0.7 million or 1 cent per share versus $0.1 million or break-even results in the year-earlier quarter. Non-GAAP earnings were well ahead of the Zacks Consensus Estimate of a loss of 7 cents.

The strong quarterly results were primarily attributable to the commercialization of X-Gene and the company's undisputed leadership in the 100 gig OTN Ethernet space. Applied Micro boasts of over 50% market share and superior products that enable Converged Ethernet in the data center.

On a GAAP basis, Applied Micro reported a net income of $23.1 million or 30 cents per share compared with a net loss of $17.6 million or loss of 26 cents per share in the year-ago quarter.

For fiscal 2014, non-GAAP net income was $5.8 million or 8 cents per share versus net loss of $28.8 million or loss of 44 cents per share in fiscal 2013. Non-GAAP earnings for the reported fiscal beat the Zacks Consensus Estimate of a loss of 19 cents. On a GAAP basis, Applied Micro reported a net loss of $5.7 million or loss of 8 cents per share compared with a net loss of $134.1 million or loss of $2.06 per share in fiscal 2013.

Quarter Details

Net revenues for the fourth quarter of fiscal 2014 were $51.8 million versus $56.3 million in the year-ago quarter. Net sales for the reported quarter were within Applied Micro's guidance though it missed the Zacks Consensus Estimate of $53.0 million. For fiscal 2014, net revenues were $216.2 million versus $195.6 million in fiscal 2013.

Revenues from the computing business grossed $27.6 million in the quarter, while the connectivity business generated $24.2 million. Geographically, sales to Asia accounted for approximately 48% of total revenue, followed by North America (42%) and Europe (10%).

Operating expenses for the reported quarter decreased sharply to $9.2 million from $49.1 million in the year-ago quarter, primarily due to a significant decline in research and development (R&D) expenses and gain on asset sale. Selling, general and administrative expenses were $9.3 million versus $13.0 in the year-ago quarter. R&D expenses were $25.7 million in fourth quarter fiscal 2014 versus $35.6 million in the prior-year period.

At fiscal end, Applied Micro had cash, cash equivalents and short-term investments of $106.6 million compared with $85.5 million at fiscal-end 2013. Net cash used in operating activities was $43.5 million for fiscal 2014 versus $33.1 million in fiscal 2013.

Outlook

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

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

For first quarter fiscal 2015, total revenue is expected in the range of $50 million to $54 million.  Non-GAAP operating expenses are expected within $29.0 million and $30.0 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. FSL, PLX Technology Inc. PLXT and Rambus Inc. RMBS, each carrying a Zacks Rank #1 (Strong Buy).