Zacks Investment Research downgraded
Applied Micro Circuits Corporation
) to a Zacks Rank #4 (Sell) from a Zacks Rank #3 (Hold) on Aug 2.
This was primarily due to a downward estimate revision in response
to soft first-quarter fiscal 2015 results announced on Jul 29.
Why the Downgrade?
Applied Micro Circuits reported first-quarter adjusted earnings at
break-even levels. Net revenues of $50.3 million fell 7% year over
year, missing the Zacks Consensus Estimate of $52.0 million. A
sharp decline in sale of the company's legacy PowerPC embedded
products was the main reason behind the drag in revenues. However,
the company witnessed some strength in its connectivity sales, and
is optimistic regarding its X-Gene server and X-Weave growth
On a GAAP basis, Applied Micro Circuits reported a net loss of 17
cents per share, compared with a net income of 30 cents per share
in the prior-year quarter. Operating expenses soared 76.8% year
over year, hurting the bottom line.
But investors were disappointed by the weak guidance. The company
anticipates second-quarter fiscal 2015 revenues in the range of
$42-$46 million, as legacy PowerPC sales look set for further
decline. Adjusted earnings per share are also expected to lie in
the red for the coming quarter.
With estimates going down in the past week, Applied Micro Circuits
has witnessed negative estimate revision for the current year. The
Zacks Consensus Estimate for second-quarter fiscal 2015 declined to
a loss of 10 cents per share from earnings of 3 cents during this
period, while for full-year fiscal 2015, it dropped to a loss of 28
cents per share from earnings of 3 cents.
Other Stocks to Consider
Better-ranked stocks in the industry include NVE Corp. (
), Silicon Motion Technology Corp. (
) and Avago Technologies Ltd (
). While NVE and Silicon Motion sport a Zacks Rank #1 (Strong Buy),
Avago holds a Zacks Rank #2 (Buy).
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