Applied Micro Circuits Corporation Reports Fourth Quarter Fiscal 2009 Financial Results


SUNNYVALE, Calif., April 30, 2009 (GLOBE NEWSWIRE) -- Applied Micro Circuits Corporation (Nasdaq:AMCC) today reported its financial results for the fourth quarter of fiscal 2009 ending March 31st, 2009.



 *   Q4 net revenues from continuing operations were $41.0 million,
     down 30% year over year and 14% sequentially. Q4 revenues from
     the discontinued storage business were $4.5 million and down 65%
     year over year and 54% sequentially.

 *   Q4 and fiscal 2009 GAAP net loss was $(27.4) million and
     $(309.3) million or $(0.42) and $(4.74) per share, respectively.
     Q4 and fiscal 2009 loss from discontinued operations were $(4.6)
     million and $(48.2) million or $(0.07) and $(0.74) per share,
     respectively.

 *   Q4 2009 non-GAAP net loss was $(11.8) million or $(0.18) per
     share and fiscal 2009 non-GAAP net income of $10.2 million or
     $0.16 per share.

 *   Total cash was approximately $184 million as of March 31, 2009
     (before the cash from the sale of the storage business).

 *   On April 21, 2009 AMCC completed the sale of its 3ware storage
     adapter solutions business for $20 million in cash.

 *   In Q4 2009, AMCC announced a reduction in force impacting
     slightly over 100 people that will result in anticipated annual
     savings of $14 to $16 million (this does not include the
     divestiture of the storage business).

 *   AMCC announced the introduction of the Yahara family of 10GbE
     Framer/Mapper/PHY devices for multi-service transport platforms
     and Metro/Long Haul Optical networks.

Net revenues from continuing operations for the fourth quarter of fiscal 2009 were $41.0 million compared to $47.7 million in the third quarter of fiscal 2009, representing a sequential decline of 14% and a decline of 30% over the $58.6 million in net revenues reported in the fourth quarter of fiscal 2008. Revenues from continuing operations for the fiscal year ended March 31, 2009 were $214.2 million compared to $194.1 million for last year, a 10% increase.

The net loss on a generally accepted accounting principles (GAAP) basis for the fourth quarter of fiscal 2009 was $(27.4) million or $(0.42) per share. The fourth quarter GAAP net loss compares with a net loss of $(274.5) million or $(4.20) per share for the third quarter of fiscal 2009 and a net loss of $(86.3) million or $(1.33) per share for the fourth quarter of fiscal 2008. The GAAP net loss for fiscal 2009 was $(309.3) million or $(4.74) per share compared to $(115.1) million or $(1.70) per share for fiscal 2008. The losses for fiscal 2009 and 2008 included $264.1 million and $71.5 million, respectively, relating to the impairment write-down of goodwill.

Non-GAAP loss from continuing operations for the fourth quarter of fiscal 2009 was $(8.4) million or $(0.13) per share, compared to non-GAAP income from continuing operations of $3.3 million or $0.05 per share in the third quarter of fiscal 2009 and non-GAAP net income from continuing operations of $5.3 million or $0.08 per share for the fourth quarter of fiscal 2008. The non-GAAP net income from continuing operations for fiscal 2009 was $11.6 million or $0.18 per share compared to a non-GAAP loss from continuing operations of $(7.1) million or $(0.10) per share for fiscal 2008.

"The lower revenues were in line with our expectations given the overall depressed market conditions. The sale of our 3ware storage adapter business enables us to focus on our core strengths in the development of integrated circuits for energy-optimized packet-based networks. Given our solid product cycles and design-win pipeline combined with our strategic refocus, I am confident we will emerge from this downturn as a much stronger company," said Kambiz Hooshmand, president and chief executive officer.

Bob Gargus, chief financial officer, commented, "The fourth quarter was difficult, but with the divestiture and certain cost control measures that we have put in place, we are confident that it will enable us to optimally focus our resources on our core business sectors and give us a solid base to scale as revenues ramp back."

AMCC reports its financial results in accordance with GAAP and also provides additional financial data that have not been prepared in accordance with GAAP. The non-GAAP results and other financial measures reported by the Company exclude certain items that are required by GAAP, such as restructuring charges, amortization of purchased intangibles, stock-based compensation charges, impairment of goodwill, strategic investment written off and gain on renegotiated design tool agreement, other than temporary impairment on investments, tax provision related to the creation of deferred tax liability relating to a prior asset purchase acquisition transaction, realized gain on sale of strategic equity investment, payroll tax on certain stock option exercises and expenses related to stock option investigation and other litigation. Expenses related to stock option investigation consist primarily of fees paid to professional service firms in connection with the Company's internal investigation of historical stock option grant practices and the resulting restatement of the Company's financial statements, the investigations by the Securities and Exchange Commission and the U.S. Attorney's office arising from the internal investigation and the defense of derivative lawsuits arising from the Company's internal investigation and other litigation relates to an accrual made for a potential litigation settlement. Income taxes are adjusted to an estimated non-GAAP effective tax rate. These non-GAAP measures are not a substitute for GAAP measures and may not be consistent with the presentation used by other companies. The Company uses the non-GAAP financial measures to evaluate and manage its operations. The Company is providing this information to allow investors to perform additional financial analysis and because it is consistent with the financial models and estimates published by analysts who follow the Company. The attached schedule reconciles non-GAAP results and other financial measures reported by the Company with the most directly comparable GAAP financial measures.

AMCC management will be holding a conference call today, April 30, 2009, at 2:00 p.m. Pacific Time/5:00 p.m. Eastern Time to discuss additional details regarding the Company's performance for the fourth quarter of fiscal 2009 and to provide guidance for the first quarter of fiscal 2010. You may access the conference call via any of the following:



 Teleconference:  719-325-4830
 Conference ID:   1494407
 Web Broadcast:   http://investor.amcc.com/events.cfm
 Replay:          719-457-0820 (available through May 5, 2009)

AMCC Overview

AMCC is a global leader in energy efficient sustainable solutions to Process, Transport, and Store information for the next generation of internet data center and carrier central office. As a leader in high speed signal processing, IP & Ethernet packet processing, and storage processing, AMCC's patented innovations provide high value highly integrated Systems On a Chip (SoCs) for Telecom, Enterprise and Consumer Applications.

AMCC's corporate headquarters are located in Sunnyvale, California. Sales and engineering offices are located throughout the world. We maintain a web site to which we regularly post copies of our press releases, our filings with the Securities and Exchange Commission and additional information about us. Interested persons can also subscribe on our web site to email alerts or RSS feeds. Please visit www.amcc.com.

This news release contains forward-looking statements that reflect the Company's current view with respect to future events and financial performance, including statements regarding the Company's focus, product cycles, design-win pipeline, strategic re-focus and future revenues. These forward-looking statements are only predictions based on current information and expectations and are subject to certain risks and uncertainties, including, but not limited to, customer demand for the Company's products, the businesses of the Company's major customers, reductions, rescheduling or cancellation of orders by the Company's customers, successful and timely development of products, market acceptance of new products, and general economic conditions. More information about potential factors that could affect the Company's business and financial results is included in the "Risk Factors" set forth in the Company's Annual Report on Form 10-K for the year ended March 31, 2008, and the Company's other filings with the Securities and Exchange Commission. Actual results could differ materially, as a result of such factors, from those set forth in the forward-looking statements. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. All forward-looking statements are qualified in their entirety by this cautionary statement, and the Company undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the issuance of this press release.



                  APPLIED MICRO CIRCUITS CORPORATION
                 CONDENSED CONSOLIDATED BALANCE SHEETS
                            (in thousands)
                              (unaudited)

                                                  --------   --------
                                                  March 31,  March 31,
 ASSETS                                             2009       2008
                                                  --------   --------

 Current assets:
   Cash, cash equivalents and short-term
    investments                                   $184,009   $142,889
   Accounts receivable, net                         17,537     28,800
   Inventories                                      26,598     30,293
   Other current assets                              8,871     11,097
   Assets of discontinued operations                 8,558      8,678
                                                  --------   --------
     Total current assets                          245,573    221,757
 Marketable securities                                  --     51,919
 Property and equipment, net                        25,749     25,233
 Goodwill                                               --    264,130
 Purchased intangibles                              32,965     56,025
 Other assets                                       20,323     13,783
                                                  --------   --------
     Total assets                                 $324,610   $632,847
                                                  ========   ========

 LIABILITIES AND STOCKHOLDERS' EQUITY

 Current liabilities:
   Accounts payable                               $ 16,715   $ 25,518
   Other current liabilities                        23,925     22,659
                                                  --------   --------
     Total current liabilities                      40,640     48,177
 Deferred tax liability                                 --      3,958
 Stockholders' equity                              283,970    580,712
                                                  --------   --------
     Total liabilities and stockholders' equity   $324,610   $632,847
                                                  ========   ========


                   APPLIED MICRO CIRCUITS CORPORATION                   
          GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS          
                (in thousands, except per share data)                  
                              (unaudited)                                
                                                                      
                          Three Months Ended          Year Ended      
                  ------------------------------ ---------------------
                   March 31, Dec. 31,   March 31, March 31,  March 31,
                     2009      2008       2008      2009       2008   
                  ------------------------------ ---------------------
                                                                      
 Net revenues     $  41,001 $   47,726 $  58,557 $  214,216 $  194,115
 Cost of revenues    21,842     22,226    28,874    101,070     98,756
                  --------- ---------- --------- ---------- ----------
 Gross profit        19,159     25,500    29,683    113,146     95,359
 Operating                                                            
  expenses:                                                           
   Research and                                                       
    development      24,202     18,625    19,916     84,687     86,117
   Selling,                                                           
    general and                                                       
    administra-                                                       
    tive             11,151     11,315    13,095     50,097     52,037
   Amortization                                                       
    of purchased                                                      
    intangibles       1,005      1,005     1,005      4,020      4,061
   Impairment of                                                      
    goodwill             --    222,972        --    222,972         --
   Restructuring                                                      
    charges, net      7,717      1,024     1,489      8,623      2,958
   Litigation                                                         
    settlement           --         --     1,125        130      1,125
   Option                                                             
    investigation                                                     
    related                                                           
    expenses, net       (4)       (79)     1,363         80      1,072
                  --------- ---------- --------- ---------- ----------
     Total                                                            
      operating                                                       
      expenses       44,071    254,862    37,993    370,609    147,370
                  --------- ---------- --------- ---------- ----------
 Operating loss    (24,912)  (229,362)   (8,310)  (257,463)   (52,011)
 Interest and                                                         
  other (expense)                                                     
  income,                                                             
   net                1,693    (7,397)   (1,551)    (7,581)     10,579
                  --------- ---------- --------- ---------- ----------
 Loss from                                                            
  continuing                                                          
  operations,                                                         
  before                                                              
  income taxes     (23,219)  (236,759)   (9,861)  (265,044)   (41,432)
 Income tax                                                           
  expense                                                             
  (benefit)           (455)    (4,396)     4,135    (3,946)      3,773
                  --------- ---------- --------- ---------- ----------
 Loss from                                                            
  continuing                                                          
  operations       (22,764)  (232,363)  (13,996)  (261,098)   (45,205)
 Loss from                                                            
  discontinue                                                         
  operations, net                                                     
  of tax (a)        (4,622)   (42,097)  (72,313)   (48,235)   (69,916)
                  --------- ---------- --------- ---------- ----------
                                                                      
 Net loss         $(27,386) $(274,460) $(86,309) $(309,333) $(115,121)
                  ========= ========== ========= ========== ==========
                                                                      
 Basic and diluted                                                    
  loss per share:                                                     
   Loss per                                                           
    share from                                                        
    continuing                                                        
    operations    $  (0.35) $   (3.55) $  (0.22) $   (4.00) $   (0.67)
   Loss per                                                           
    share                                                             
    from                                                              
    discontinued                                                      
     operations      (0.07)     (0.65)    (1.11)     (0.74)     (1.03)
                  --------- ---------- --------- ---------- ----------
 Net loss per                                                         
  share           $  (0.42) $   (4.20) $  (1.33) $   (4.74) $   (1.70)
                  ========= ========== ========= ========== ==========
 Shares used in                                                       
  calculating                                                         
  basic and                                                           
  diluted loss                                                        
  per share          65,703     65,366    64,886     65,271     67,775
                  ========= ========== ========= ========== ==========

(a) The following table provides information on the components of the loss from discontinued operations for the periods presented:



                                                                      
 Components of discontinued operations                                
                                                                      
                                                                      
                           Three Months Ended          Year Ended     
                  ------------------------------ ---------------------
                  March 31,  Dec. 31,   March 31,  March 31, March 31,
                    2009       2008       2008       2009      2008   
                  ------------------------------ ---------------------
                                                                      
 Net revenues     $   4,508 $    9,839 $  12,977 $   39,849 $   52,031
 Cost of revenues     4,071      5,537     7,657     24,437     27,912
                  --------- ---------- --------- ---------- ----------
 Gross profit           437      4,302     5,320     15,412     24,119
 Operating                                                            
  expenses:                                                           
  Research and                                                        
   development        2,758      2,630     2,976     11,470     11,433
  Selling,                                                            
   general and                                                        
   administrative     2,142      2,103     2,774      9,561      9,870
  Amortization of                                                     
   purchased                                                          
   intangibles          315        315       315      1,260      1,260
  Impairment of                                                       
   goodwill              --     41,158    71,494     41,158     71,494
  Restructuring                                                       
   charges, net          --        126        27        126         27
                  --------- ---------- --------- ---------- ----------
      Total                                                           
       operating                                                      
       expenses       5,215     46,332    77,586     63,575     94,084
                  --------- ---------- --------- ---------- ----------
 Loss from                                                            
  discontinued                                                        
  operations,                                                         
  before income                                                       
  taxes             (4,778)   (42,030)  (72,266)   (48,163)   (69,965)
 Income tax                                                           
  expense                                                             
  (benefit)           (156)         67        47         72       (49)
                  --------- ---------- --------- ---------- ----------
 Loss from                                                            
  discontinued                                                        
  operations,                                                         
  net of tax      $ (4,622) $ (42,097) $(72,313) $ (48,235) $ (69,916)
                  ========= ========== ========= ========== ==========


                  APPLIED MICRO CIRCUITS CORPORATION
     RECONCILIATION OF GAAP NET LOSS TO NON-GAAP NET INCOME (LOSS)
              FOR CONTINUING AND DISCONTINUED OPERATIONS
                 (in thousands, except per share data)
                              (unaudited)

                        Three Months Ended             Year Ended
                   -----------------------------  -------------------
                   March 31,  Dec. 31,  March 31,  March 31, March 31,
                     2009       2008      2008       2009      2008
                   -----------------------------  -------------------

 GAAP loss - from
  continuing
  operations       $(22,764) $(232,363) $(13,996) $(261,098) $(45,205)
   Adjustments:
    Stock-based
    compensation
    charges           2,076      1,547     2,691      9,185    10,056
   Amortization of
    purchased
    intangibles       4,588      4,588     4,863     18,900    19,601
   Impairment of
    goodwill             --    222,972        --    222,972        --
   Restructuring
    charges, net      7,717      1,024     1,489      8,623     2,958
   Impairment of
    strategic
    investment           --         --     3,000         --     3,000
   Other than
    temporary
    investment
    impairment          203     10,104       836     17,144     1,682
   Gain on
    renegotiated
    design tool
    agreement            --         --        --         --      (749)
   Realized gain on
    sale of
    strategic
    equity
    investment           --         --        --         --    (4,649)
   Payroll taxes on
    certain stock
    option
    exercises            --         --        --         --         3
   Litigation
    settlement           --         --     1,125        130     1,125
   Option
    investigation
    related
    expenses, net        (4)       (79)    1,363         80     1,072
   Income tax
    adjustments        (196)    (4,498)    3,970     (4,306)    3,993
 Total GAAP to
  non-GAAP           
  adjustments -
  continuing       --------  ---------  --------  ---------  --------
  operations         14,384    235,658    19,337    272,728    38,092
                   --------  ---------  --------  ---------  --------

 Non-GAAP income
  (loss) -
  continuing
  operations       $ (8,380) $   3,295  $  5,341  $  11,630  $ (7,113)
                   ========  =========  ========  =========  ========

 Diluted income
  (loss) per share
  - continuing     
  operations       $  (0.13) $    0.05  $   0.08  $    0.18  $  (0.10)
                   ========  =========  ========  =========  ========

 Shares used in
  calculating
  diluted income
  (loss) per share   65,703     65,531    65,039     65,480    67,775
                   ========  =========  ========  =========  ========

 Income (loss) per
  share -
  continuing
  operations:
   GAAP loss per
    share -
    continuing
    operations     $  (0.35) $   (3.55) $  (0.22) $   (4.00) $  (0.67)
   GAAP to non-GAAP
    adjustments        0.22       3.60      0.30       4.18      0.57
                   --------  ---------  --------  ---------  --------
  Non-GAAP income
   (loss) per share
    - continuing
    operations     $  (0.13) $    0.05  $   0.08  $    0.18  $  (0.10)
                   ========  =========  ========  =========  ========

 Reconciliation of
  shares used in
  calculating the
  non-GAAP income
  per share:
   Shares used in
    calculating the
    basic and
    diluted income
    (loss) per
    share            65,703     65,366    64,886     65,271    67,775
   Adjustment for
    dilutive
    securities           --        165       153        209        --
                   --------  ---------  --------  ---------  --------
   Non-GAAP shares
    used in the EPS
    calculation      65,703     65,531    65,039     65,480    67,775
                   ========  =========  ========  =========  ========


 Discontinued
  operations

 GAAP loss from
  discontinued
  operations       $ (4,622) $ (42,097) $(72,313) $ (48,235) $(69,916)
   Adjustments:
    Stock-based
     compensation
     charges            197        358       387      1,198     1,251
    Amortization of
     purchased
     intangibles      1,040      1,040     1,040      4,160     4,160
    Impairment of
     goodwill            --     41,158    71,494     41,158    71,494
    Restructuring
     charges, net        --        126        27        126        27
    Impairment of
     strategic
     investment
    Income tax
     adjustments        (50)        47        27        118      (258)
   Total GAAP to
    non-GAAP            
    adjustments -
    discontinued   --------  ---------  --------  ---------  --------
    operations        1,187     42,729    72,975     46,760    76,674
                   --------  ---------  --------  ---------  --------

   Non-GAAP income
    (loss) -
    discontinued
    operations     $ (3,435) $     632  $    662  $  (1,475) $  6,758
                   ========  =========  ========  =========  ========

 Income (loss) per
  share -
  discontinued
  operations:
   GAAP income
    (loss) per
    share -
    discontinued
    operations     $  (0.07) $   (0.64) $  (1.11) $   (0.74) $  (1.03)
   GAAP to non-GAAP
    adjustments        0.02       0.65      1.12       0.72      1.13
                   --------  ---------  --------  ---------  --------
   Non-GAAP income
    (loss) per share
    - discontinued
    operations     $  (0.05) $    0.01  $   0.01  $   (0.02) $   0.10
                   ========  =========  ========  =========  ========



                 APPLIED MICRO CIRCUITS CORPORATION
     RECONCILIATION OF CERTAIN NON-GAAP FINANCIAL MEASURES TO THE
           MOST DIRECTLY COMPARABLE GAAP FINANCIAL MEASURE
                            (in thousands)
                              (unaudited)

 The following schedule reconciles certain GAAP financial measures
 to their corresponding non-GAAP financial measure


                          Three Months Ended            Year Ended
                    -----------------------------  -------------------
                    March 31,  Dec. 31,  March 31,  March 31, March 31,
                      2009      2008       2008       2009      2008
                    -----------------------------  -------------------
 GROSS PROFIT:
 GAAP gross profit  $19,159  $  25,500  $  29,683  $ 113,146  $ 95,359
  Gross profit from
   discontinued
   operations           437      4,302      5,320     15,412    24,119
  Amortization of
   purchased
   intangibles        4,308      4,308      4,583     17,780    18,440
  Stock-based
   compensation
   expense               61         91        135        548       671
                    -------  ---------  ---------  ---------  --------
 Non-GAAP gross
  profit -
  consolidated
  operations        $23,965  $  34,201  $  39,721  $ 146,886  $138,589
                    =======  =========  =========  =========  ========

 OPERATING EXPENSES:
 GAAP operating
  expenses          $44,071  $ 254,862  $  37,993  $ 370,609  $147,370
   Operating
    expenses from
    discontinued
    operations        5,215     46,332     77,586     63,575    94,084
   Stock-based
    compensation
    expense          (2,212)    (1,814)    (2,943)    (9,835)  (10,636)
   Amortization of
    purchased
    intangibles      (1,320)    (1,320)    (1,320)    (5,280)   (5,321)
   Impairment of
    goodwill             --   (264,130)   (71,494)  (264,130)  (71,494)
   Restructuring
    charges, net     (7,717)    (1,150)    (1,516)    (8,749)   (2,985)
   Gain on
    renegotiated
    design tool
    agreement            --         --         --         --       749
   Payroll taxes on
    certain stock
    option
    exercises            --         --         --         --        (3)
   Litigation
    settlement           --         --     (1,125)      (130)   (1,125)
   Option
    investigation
    related
    expenses, net         4         79     (1,363)       (80)   (1,072)
                    -------  ---------  ---------  ---------  --------
 Non-GAAP operating
  expenses -
  consolidated
  operations        $38,041  $  32,859  $  35,818  $ 145,980  $149,567
                    =======  =========  =========  =========  ========

 INTEREST AND OTHER
  INCOME, NET
  GAAP interest and
   other income
   (expense), net   $ 1,693  $  (7,397) $  (1,551) $  (7,581) $ 10,579
    Realized gain
     on sale of
     strategic
     equity
     investments         --         --         --         --    (4,649)
    Impairment of
     strategic
     investment          --         --      3,000         --     3,000
    Other than
     temporary
     investment
     impairment         203     10,104        836     17,144     1,682
                    -------  ---------  ---------  ---------  --------
  Non-GAAP interest
   and other
   income, net -
   consolidated
   operations       $ 1,896  $   2,707  $   2,285  $   9,563  $ 10,612
                    =======  =========  =========  =========  ========

 INCOME TAX EXPENSE
  (BENEFIT):
 GAAP income tax
  expense (benefit) $  (455) $  (4,396) $   4,135  $  (3,946) $  3,773
   Income tax
    expense
    (benefit) from
    discontinued
    operations         (156)        67         47         72       (49)
   Income tax
    adjustments         246      4,450     (3,996)     4,188    (3,735)
                    -------  ---------  ---------  ---------  --------
 Non-GAAP income
  tax expense
  (benefit) -
  consolidated
  operations        $  (365) $     121  $     186  $     314  $    (11)
                    =======  =========  =========  =========  ========

 RESEARCH AND
  DEVELOPMENT
 GAAP research and
  development       $24,202  $  18,625  $ 19,916   $  84,687  $ 86,117
   Research and
    development
    from
    discontinued
    operations        2,758      2,630      2,976     11,470    11,433
   Stock-based
    compensation
    expense            (853)    (1,244)    (1,349)    (4,532)   (4,797)
   Gain on
    renegotiated
    design tool
    agreement            --         --         --         --       749
   Payroll taxes on
    certain stock
    option
    exercises            --         --         --         --        (2)
                    -------  ---------  ---------  ---------  --------
   Non-GAAP
    research and
    development -
    consolidated
    operations      $26,107  $  20,011  $  21,543  $  91,625  $ 93,500
                    =======  =========  =========  =========  ========

 SELLING, GENERAL
  AND
  ADMINISTRATIVE
 GAAP selling,
  general and
  administrative    $11,151  $  11,315  $  13,095  $  50,097  $ 52,037
   Selling, general
    and
    administrative
    expenses from
    discontinued
    operations        2,142      2,103      2,774      9,561     9,870
   Stock-based
    compensation
    expense          (1,359)      (570)    (1,594)    (5,303)   (5,839)
   Payroll taxes on
    certain stock
    option
    exercises            --         --         --         --        (1)
                    -------  ---------  ---------  ---------  --------
   Non-GAAP selling,
    general and
    administrative
    - consolidated
    operations      $11,934  $  12,848  $  14,275  $  54,355  $ 56,067
                    =======  =========  =========  =========  ========



                  APPLIED MICRO CIRCUITS CORPORATION
            CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                            (in thousands)
                              (unaudited)

                                                Year Ended March 31,
                                              -----------------------
                                                 2009         2008
                                              -----------  ----------

 Operating activities:
  Net loss                                    $  (309,333) $ (115,121)
    Adjustments to reconcile net loss to net
     cash provided by (used for) operating
     activities
    Depreciation                                    6,862       6,542
    Amortization of purchased intangibles          23,060      23,762
    Impairment of goodwill                        264,130      71,494
    Stock-based compensation expense:
      Stock options                                 5,309       9,350
      Restricted stock units                        5,222       1,957
    Non-cash restructuring charges                  1,088         316
    Litigation settlement                              --       1,125
    Net gain on sale of strategic equity
     investment                                        --      (4,649)
    Impairment of strategic investment                 --       3,000
    Impairment of short-term investments
     and marketable securities                     17,144       1,682
    Net loss on disposal of property                   48          23
    Changes in operating assets and
     liabilities:
       Accounts receivable                         11,263       3,758
       Inventories                                  3,414      (6,680)
       Other assets                                (4,141)      2,282
       Accounts payable                            (8,803)     (1,375)
       Accrued payroll and other accrued
        liabilities                                   597      (7,103)
       Deferred taxes                              (3,957)      3,957
       Deferred revenue                               668        (476)
                                              -----------  ----------
         Net cash provided by (used for)
          operating activities                     12,571      (6,156)

 Investing activities:
   Proceeds from sales and maturities
    investments                                 1,117,424     623,619
   Purchases of investments                    (1,068,205)   (550,137)
   Purchase of strategic investments                   --      (5,000)
   Net proceeds from the sale of strategic
    equity investment                                  --       5,249
   Purchase of property, equipment and
    other assets                                   (7,259)     (7,021)
   Proceeds from sale of property,
    equipment and other assets                         --       1,646
   Net cash paid for acquisitions                      --         232
                                              -----------  ----------
         Net cash provided by investing
          activities                               41,960      68,588

 Financing activities:
   Proceeds from issuance of common stock           2,448       6,431
   Repurchase of Company stock                         --     (56,950)
   Funding of structured stock repurchase
    agreements                                         --     (41,830)
   Funds received from structured stock
    repurchase agreements including gains              --      21,112
   Other                                             (331)       (101)

                                              -----------  ----------
         Net cash provided by (used for)
          financing activities                      2,117     (71,338)
                                              -----------  ----------
         Net increase (decrease) in cash and
          cash equivalents                         56,648      (8,906)
 Cash and cash equivalents at beginning of
  the period                                       42,689      51,595
                                              -----------  ----------
 Cash and cash equivalents at end of the
  period                                      $    99,337  $   42,689
                                              ===========  ==========


            

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