Applied Micro Circuits Corporation (AMCC) reported second-quarter fiscal 2015 non-GAAP net loss of $5.0 million or loss of 6 cents on a per share basis versus a net income of $2.0 million or 3 cents per share in the year-ago period. The non-GAAP loss for the reported quarter was narrower than the Zacks Consensus Estimate of a loss of 10 cents.
On a GAAP basis, Applied Micro reported a net loss of $11.7 million or loss of 15 cents per share compared with a net loss of $32.4 million or loss of 45 cents per share in the year-ago quarter. The year-over-year improvement was primarily driven by lower operating expenses.
Quarter Details
Net revenues for the second quarter of fiscal 2015 were $40.9 million versus $55.4 million in the year-ago quarter. Net sales for the reported quarter missed the Zacks Consensus Estimate of $44.0 million.
Revenues from the computing business grossed $16.0 million in the quarter, while the connectivity business generated $24.9 million. Geographically, sales to North America accounted for approximately 47% of total revenue, followed by Asia (31%) and Europe (22%).
Operating expenses for the reported quarter declined to $32.6 million from $66.8 million in the year-ago quarter. Selling, general and administrative expenses were $7.9 million versus $9.1 in the prior-year period. R&D expenses were $24.7 million in second-quarter fiscal 2015 versus $56.6 million in the year-earlier quarter.
Non-GAAP gross margin of 57% was below the guidance range in the reported quarter, primarily due to lower-than-expected connectivity sales, which carry high average gross margins.
At quarter end, Applied Micro had cash, cash equivalents and short-term investments of $89.5 million. Net cash used in operating activities was $7.5 million versus $17.5 million in the prior-year period. Channel inventory, excluding certain non-cancelable non-returnable orders, was 59 days, down from 80 days in the prior-year quarter. This reflected a conscious effort by the company to reduce channel inventory levels.
Outlook
Applied Micro expects to generate decent revenue in the third quarter with new product introductions, lean channel inventory levels, a high book-to-bill ratio and strong backlog coverage. The company expects embedded computer products to generate healthy revenue growth in the forthcoming quarters driven by X-Gene based embedded products.
For third-quarter fiscal 2015, total revenue is expected in the range of $36 million plus or minus $2 million. Non-GAAP operating expenses are expected within $28.0 million and $29.0 million, while non-GAAP gross margin is expected in the range of 55% to 59%. Non-GAAP loss is anticipated to be 10 cents per share plus or minus 2 cents.
Applied Metro currently has a Zacks Rank #4 (Sell). Better-ranked players in the industry that are worth mentioning include Ambarella, Inc. (AMBA), Avago Technologies Limited (AVGO) and SunEdison, Inc. (SUNE), each carrying a Zacks Rank #1 (Strong Buy).
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