AMCC Looks Ahead Despite Reporting $3 Billion Loss in the First Quarter
It isn’t often public companies tout quarterly net losses unless it’s a positive, but that’s exactly what Carlsbad-based NTN Communications did recently when it announced it lost nearly $1 million in its second quarter and $2.5 million for the first half.
“We are proud with the results, and we’ve been very direct with our investors all along. We’re not trying to hide anything from anybody, said Chairman and CEO Stanley Kinsey.
Kinsey is finally seeing a turnaround with the latest quarterly results that for the first time produced a positive cash flow.
“This was the first time for the past 15 quarters or since 1997 that the amount of cash we have coming in is greater than the amount of cash we’re investing,” Kinsey said.
NTN, an interactive game content developer that has been around for 16 years, gets nearly all its revenue from licensing fees on its trivia and other interactive games in 3,500 restaurants and bars in North America.
Over the past two years, the firm has invested about $10 million into the network. Each new site costs an average of $3,500 to install the necessary equipment.
And while the network is still losing money, the turnaround is in sight. It could come when it hits about 4,000 sites, maybe a little later, the company said.
But more exciting to the firm’s future is the growth in interactive television, which was intended to be the company’s core business when it was founded.
Last year the company invested some $8 million into the unit it calls Buzztime Entertainment, which included a $1 million investment from Scientific-Atlanta.
Buzztime is developing an interactive trivia cable channel it hopes to roll out next year after it is field-tested.
“We could be the first content company in people’s homes via their television sets. That’s a monstrous market,” he said, referring to the 80 million homes that have cable television.
So while NTN said it will have lower revenues overall this fiscal year compared to last, its net loss will be significantly lower. More importantly, there’s light at the end of the tunnel, Kinsey said.
“We’ve survived for 15 years waiting for a market to develop and now the market is finally rolling out,” he said.
NTN Communications, which has about 140 employees, including about 100 in Carlsbad, saw its Amex-traded stock decline after the news. It was trading at 71 cents at July 23, while its 52-week range was between $3.18 and 43 cents.
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AMCC Reports Loss:
In contrast to NTN, to figure out how much money San Diego-based Applied Micro Circuits Corp. lost in its recent quarter, you’ll have to dig a little, because the firm, like so many other public companies these days prefers to report its income on “pro forma” basis. That is, reporting results without including such extraordinary items as write-downs, restructuring charges and one-time tax events.
So last week, AMCC, which makes high-speed silicon chips used in the Internet networking and telecom industries, said it had a “pro forma net loss” for its first quarter of $13.6 million or 5 cents a share, compared to making a $27.9 million pro forma profit in the first quarter of 2000.
Further down in the report was the actual net loss, the one AMCC , like every public firm , has to tell the SEC. That number is $3,338,180,000.
That’s $3 billion in one quarter. The bulk of that loss was caused by a write-down of goodwill of MMC, another silicon chip-maker AMCC purchased last year, and other write-downs of acquisitions.
Because of continued weakness in the sale of its product, the company has continued to reduce expenses and cut its staff by 5 percent, or 58 people, primarily in its San Diego’s fabrication plant. It has about 1,140 employees, mostly in San Diego.
AMCC’s two largest customers are Nortel Networks and Cisco Systems, both of which have reported massive losses this year and aren’t buying as many chips. Nortel took a $19 billion net loss for its most recent quarter and said it will cut its work force by about 10,000 jobs.
For the quarter ended June 30, AMCC reported $41 million in sales, compared to $121 million for the same period in the previous year.
CEO Dave Rickey said he believes the huge loss represents the bottom. He said canceled orders are winding down while new orders are heading up, and the expectation is its big customers will have to resume buying because back inventories are nearly exhausted.
For the rest of the fiscal year, Rickey said he expects revenues to grow by “single to low double digits.”
AMCC stock, traded on Nasdaq, initially gained from the news, hitting above $18, but then dropped. It closed at $15.36 on July 23. Its 52-week range is between $109.75 and $11.25.
In other AMCC news, Steve Smith was appointed as new controller, succeeding Monte Reed, who retires July 31.
PhatPipe Lays Off 28:
PhatPipe Inc., a Carlsbad provider of Internet and other services to commercial office buildings, said it laid off 28 workers earlier this month.
CFO Charlie Huiner declined to say anything more, including how many employees were left. One report put the total employment before the layoff at 38, but Huiner said it was higher.
Founded in 1999, PhatPipe sells its services to building owners, who then agree to offer the services to tenants. The services include broadband Internet access, telecom services, and energy efficiency services.
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Nasdaq Delists Planet Polymer:
The Nasdaq delisted one San Diego firm, while another local company moved up to the national market board from the small cap market.
Delisted July 18 was Planet Polymer Technologies Inc., a firm that develops and licenses water-soluble polymer and biodegradable materials used by agriculture and other industries. The delisting was done because the company fell below Nasdaq’s net tangible assets minimum of $2 million and its minimum bid price of $1 per share.
Planet Polymer had tangible assets of about $1.5 million and has been trading between 40 cents to 32 cents for much of the quarter.
The firm’s stock will now be traded on the over the counter bulletin board.
U.S. Laboratories, a San Diego-based engineering and other specialty services provider, began trading on the Nasdaq national markets board after it was able to boost its float and reach a few other minimum requirements.
The company, which has traded on Nasdaq small cap market since 1999, expects the move will increase visibility and increase business.
It has been trading between $15 and $3.31 for past year, and closed at $10.89 on July 23.
Cohu Buys Ohio Firm:
Cohu Inc., which recently took up residence in the South Poway Business Park, said its Delta Design subsidiary purchased Automated Systems, a Columbus, Ohio, business unit of Schlumberger Semiconductor Solutions for $14.2 million in cash.
Automated Systems designs, manufactures and sells semiconductor equipment. The acquisition is expected to help Delta Design in the manufacturing of test handling equipment serving the semiconductor manufacturing industry.
The acquisition will be accounted for as a purchase in the third quarter.
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Entrepreneurial Series Launches:
The Forum for Women Entrepreneurs, a San Francisco-based nonprofit development organization with a new chapter here, is sponsoring a new educational program at SDSU this fall.
The six-session program, called eSeries, covers such topics as valuation, legal structure, strategic partnering and finances. Instructors are professionals in the ranks of accounting, venture capital and law. The series runs Thursday evenings from Sept. 13 to Oct. 18. Cost is $275 for members; $350 for non-members. Jennifer Beckey, the executive director for the local Forum chapter, can be reached at jjbeckey@yahoo.com.
Fax high-tech finance news to (858) 571-3628 or e-mail to mallen@sdbj.com.
