Changes Begin at AMCC
After four months on the job at Applied Micro Circuits Corp. (AMCC) (Nasdaq: AMCC), new CEO Kambiz Hooshmand is ready to bring in the axe.
Alongside AMCC's first-quarter earnings report yesterday, Hooshmand announced a layoff of 5 percent of the company's 750 employees. The cuts are geared toward "flattening the organizational structure" and "empowering the organization to make quicker decisions," Hooshmand told analysts during AMCC's earnings call yesterday. [Ed. note: Flatten me! Empower me!]
Hooshmand announced no other changes, but he made it clear he's done studying AMCC and is ready to start putting his stamp on the company.
For its first quarter, which ended June 30, AMCC reported a loss of $4.2 million, or 1 cent per share, on revenues of $64.7 million, compared with a loss of $5.3 million, 2 cents per share, on revenues of $64.2 million the previous quarter (see AMCC Reports Q1).
For its first quarter a year ago, AMCC reported losses of $21.8 million, or 7 cents per share, on revenues of $67.4 million.
Those figures are according to generally accepted accounting principles (GAAP). AMCC's pro forma net income was 1 cent per share, matching analysts' expectations, but its revenues fell short of the consensus estimate of $65.3 million, according to Reuters Research.
Moreover, AMCC expects revenues to stay flat going into its second quarter. Analysts had expected a few percentage points of growth, to $67.2 million revenues.
Hooshmand joined AMCC from in March, after AMCC reportedly scuttled merger talks with Vitesse Semiconductor Corp. (Nasdaq: VTSS). (See AMCC Appoints President and CEO and AMCC, Vitesse Nearly Tied the Knot.) On yesterday's call, Hooshmand said he's gotten himself acquainted by talking to 120 AMCC employees to flesh out his picture of the company.
He added that he's made some key hires to help him mold the company, although a new CFO isn't one of them yet (see AMCC's CFO to Retire). His changes so far don't include any radical restructuring. AMCC, he said, will continue to play in three product groups: communications chips (its roots), storage, and embedded microprocessors.
Hooshmand probably has a deeper strategy in the works but isn't ready to articulate it yet, says analyst Tim Kellis of Stanford Financial Group. "Kambiz is still in sort of a honeymoon period," Kellis says.
As for what ails AMCC, first-quarter revenues were dinged partly by AMCC's embedded processor business, where some customers were going through "manufacturing transitions" that stunted sales, Hooshmand told analysts.
Fellow com-chip stalwarts PMC-Sierra Inc. (Nasdaq: PMCS) and Vitesse fared better in their earnings reports last week. PMC broke even after taking $7.6 million in restructuring costs related to a previously announced layoff, while Vitesse reported losses of $11.8 million, admittedly better than the $28.9 million loss from its previous quarter (see PMC-Sierra Reports Q2, PMC-Sierra Cuts 89, and Vitesse Posts Q3 Results).
Both those companies saw revenues increase, but profits continue to lag. "I would think where we are in this turnaround in the communications market, these guys would start showing some better numbers," Kellis says.
AMCC stock was down 9 cents (2.9%) at $3.06 in after-hours trading.
— Craig Matsumoto, Senior Editor, Light Reading