Headed Lower?

[christopher]

I am not a chart guy

But, I will say , while looking at this chart it looks as though we have a possibility to drop a smidge below $6.00.

Maybe around $5.70?

According to the chart isn't it a good chance we will be dropping off of the blue line shown?

if so, that's fine. Then we will begin to rise going into Q3 earnings which is just around the corner

www.finviz.com/quote.ashx?t=amcc

[christopher]

so much for my low guess of bottoming out at $5.70. We closed down .32 today at $5.56 share. sucks

I do have a feeling that I am close though.

around 1 million shares traded today.

Is this all about dragging the share price down, to grab a bundle of shares on the cheap?  Using negatives taking place throughout the world, as an excuse before we head into earnings. or is it really because of a decline in the worldwide macro environment?

What it all comes down to is: 

AMCC earnings scheduled to be released at the end of the month.

with a very good sized drop in share price, it's all about how many shares will be bought going into earnings.

Will there be enough willing participants to help drive up the share price?

[Admin]

I would agree that this is a manipulation, but only on the highest level.

I would suggest that this cratering in share price is the market re-pricing itself in the wake of the interest rate rise by the Fed and the economic implosion of China. This aspect of the decline in the share price is a macro event. CAVM is having a similar reaction in its share price, as was the share prices of INTC and QCOM, but yesterday was especially brutal for AMCC. The analysts are all re-affirming their guidance (except of course for Zachs, whose prognostications are just plain twitchy).

Another aspect of the downturn is that AMCC has a lot more competition now than it did just a few months ago. I will say though that much of that competition is in the embedded internet of things market and not the ARM server market, so Helix has potentially a lot of competition, but X-Gene, not so much. They're also a first mover, and have a lot of experience in the mixed signal telecom/datacom arena and can provide complete solutions better than anyone else of their size.

Another aspect of all this, is that an economic downturn might actually drive investment in lower cost of ownership servers. But it might be too early to say if this is an economic downturn or just a market re-valuation driven by the Fed's rate increase. If this is just the air coming out of the market, then an increase in revenue might just mitigate a decrease in overall valuation. What could the P/S valuation be driven down to? 1? Less than 1? I don't think that's possible, unless we are in a full melt-down. CAVM currently has a P/S ratio around 8, which is ridiculous, but makes them much riskier in an economic downturn than AMCC.

Also, if the now inflated value of equities becomes less, then companies who do not turn a profit will be less able to continue financing operations by selling new equity at inflated prices. I think that was another reason why Billy Martin pulled the plug on VTSS: he realized that perpetual new offerings were diluting his investment. If this happens with AMCC, then we might see a push for a sale, even at a lower price. AMCC needs to get to BE.

The key will be if AMCC can continue to grow organically and continue to make their numbers. Now the earnings call is on Thursday. Traditionally, this is not a good sign. It's not as good as a Monday, nor as portentious of doom as a Friday, but I do think that Gopi should have come out and reaffirmed earnings. Oh well, whatever. When has management ever cared about what the retail investor thinks?

A miss combined with the current market in which we find ourselves will send people for the exits.

I hope Gopi has an exit strategy lined-up (sale) just in case. Hold your breath until the call.

[Admin]

I'm going to go out on a limb here and say, that if the quarterly earnings come in at $40.5M and up (my own optimistic upper range was around $42.1M), I will continue to hold. Anything less than the first number, and I'm out. I've already dealt with a company experiencing "softness in China" in perpetuity, and the outcome is usually not good. I will be looking at the tone of the call somewhat, but numbers always speak louder than BS. If I have learned anything from investing in VTSS, it is to cut losses while you can. I'm optimistic still, AMCC has a lot going for it, including starting from a very low valuation and small size, where if they get any piece of this low-end server market at all, that alone should goose the share price significantly.

Watching and waiting Christopher, watching and waiting.

I'll be looking at the Needham "Growth" Conference on Tuesday at lunch time too, to see if we can get any preview of the earnings call a week from Thursday.

[christopher]

I wonder if we can expect something new as far as products go, during Tuesday's conference. A recent story mentioned a 96-core chip to be released within the next month, so I doubt that will be the item. you never know though.

Optimism continues to be my path as far as AMCC goes. There has been multiple upon multiple mentions of this company being a prime candidate as far as acquisitions go. As I stated before, back in June I read that a sale would most likely be within the next six to nine months, anywhere between December 2015 and March of 2016. The reason for the timing of a sale was stated that at the present AMCC is burning through a lot of cash. This is where I hope "break even" comes into play and a sale is pushed off until revenues rise enough for a maximum sale price. That is unless revenues drop then I guess a sale would be expected on any level.

After many years of turmoil with VTSS, I really hope to have a positive outcome with this situation.

If "the normal" continues to play out, I would expect to hear something positive  during the upcoming Needham conference.

[Admin]

Unless I miss my guess, EVERYTHING should be positive during the upcoming Needham conference. Like you, I'm looking for announcements of new stuff and strategies, as well as the tone going forward. Maybe we'll get a little foresight into the earnings call.