Applied Micro Circuits Corporation Common Stock-ne has a market cap of $780.28 million; its shares were traded at around $11.92 with a P/E ratio of 238.4 and P/S ratio of 3.8. AMCC is in the portfolios of George Soros of Soros Fund Management LLC, Bruce Kovner of Caxton Associates, Jim Simons of Renaissance Technologies LLC.
Highlight of Business Operations:In July 2008, we entered into a Patent Purchase Agreement (the Agreement) with QUALCOMM Incorporated (Qualcomm). Pursuant to the Agreement, we agreed to sell a series of our patents, patent applications and associated rights related to certain technologies for an aggregate purchase price of $33.0 million. The purchase price is being paid over three years in equal quarterly payments of $3.0 million each beginning in the three months ended December 31, 2008 through March 31, 2011. Due to the nature of the payment terms, related revenue is being recorded as the payments are received.
Sale of the 3ware storage adapter business to LSI Corporation. We completed the sale of our 3ware storage adapter business (the Transaction), a significant portion of our overall storage business and substantially all of our Store reporting unit, to LSI Corporation on April 21, 2009. As a result, we now expect to generate all of our sales from our remaining business, Process and Transport, which will require us to grow our remaining business in order to achieve profitability. Under the Asset Purchase Agreement with LSI Corporation (the Purchase Agreement), which we entered on April 5, 2009, we sold substantially all of the operating assets (other than patents) of our 3ware storage adapter business. The assets sold included customer contracts, inventory, fixed assets, certain intellectual property and other assets, as well as rights to the name 3ware. The purchase price, adjusted for the level of inventory and products in the channel at the closing of the Transaction, was approximately $21.5 million. The net gain recorded from this transaction during the fiscal year ended March 31, 2010 was $11.4 million. Unless otherwise specified, all amounts discussed in the Managements discussion and analysis addresses only continuing operations.
Our policy is to value inventories at the lower of cost or market on a part-by-part basis. This policy requires us to make estimates regarding the market value of our inventories, including an assessment of excess or obsolete inventories. We determine excess and obsolete inventories based on an estimate of the future demand for our products within a specified time horizon, generally 12 months. The estimates we use for future demand are also used for near-term capacity planning and inventory purchasing and are consistent with our revenue forecasts. If our demand forecast is greater than our actual demand we may be required to take additional excess inventory charges, which would decrease gross margin and net operating results. For example, as of June 30, 2010, reducing our future demand estimate to six months could decrease our current inventory valuation by approximately $1.3 million or increasing our future demand forecast to 18 months could increase our current inventory valuation by approximately $0.2 million.
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