Applied Micro Circuits (AMCC) 8-K Applied Micro Circuits Corporation Reports Third Quarter Fiscal 2007 Financial Results

Exhibit 99.1

FOR ADDITIONAL INFORMATION:
Investor Relations Contact:	Media/Editorial Contact:
Applied Micro Circuits Corporation Scott Dawson	The Bernard Group Diane Bernard
Phone: (858) 535-4217	Phone: (512) 617-6319
E-Mail:sdawson@amcc.com	E-Mail:diane@bernardgroup.com

Tuesday, January 30, 2007

Company Press Release

APPLIED MICRO CIRCUITS CORPORATION REPORTS THIRD QUARTER FISCAL 2007 FINANCIAL RESULTS

Revenues of $76.6 million, up 17.5% from the third quarter last year

Q3 GAAP net loss of $4.2 million and $(0.01) per share

Q3 non-GAAP net income of $9.0 million and $0.03 per share

Revenues from storage products grew 12% sequentially

SUNNYVALE, Calif., —January 30, 2007—Applied Micro Circuits Corporation [NASDAQ: AMCC] today reported its financial results for the three and nine months ended December 31, 2006.

Net revenue for the third quarter of fiscal 2007 was $76.6 million compared to the $76.4 million reported in the second quarter of fiscal 2007 and $65.2 million reported in the third quarter of fiscal 2006.

The net loss on a generally accepted accounting principles (GAAP) basis for the third quarter of fiscal 2007 was $4.2 million or $(0.01) per share, compared with a net loss of $13.9 million or $(0.05) per share for the second quarter of fiscal 2007 and net income of $584,000 or $0.00 per share for the third quarter of fiscal 2006.

The non-GAAP net income for the third quarter of fiscal 2007 was $9.0 million or $0.03 per diluted share, compared to the non-GAAP net income of $10.4 million or $0.04 per diluted share in the second quarter of fiscal 2007 and the non-GAAP net income of $4.8 million or $0.02 per diluted share in the third quarter of fiscal 2006.

Net revenue for the nine months ended December 31, 2006 was $222.7 million and increased 14.3% from the $194.9 million reported for the nine months ended December 31, 2005.

The GAAP net loss for the nine months ended December 31, 2006 was $18.9 million or $(0.07) per share, compared to the GAAP net loss of $10.0 million or $(0.03) per share for the nine months ended December 31, 2005. The non-GAAP net income for the nine months ended December 31, 2006 was $27.5 million or $0.10 per share, a 133% increase compared with the non-GAAP net income of $11.8 million or $0.04 per share for the nine months ended December 31, 2005.

“The communications market weakened throughout this quarter due to inventory corrections and industry consolidations. Revenues were disappointing but we managed on-going expenses well. Storage revenues showed strong sequential growth since we executed our initiatives to enhance our product portfolio and channel partners,” said Kambiz Hoosmand, president and chief executive officer.

AMCC reports its financial results in accordance 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 and impairments of purchased intangibles and goodwill, acquired in-process research and development charges, stock-based compensation charges, litigation settlement costs, realized gains on strategic equity investments, payroll tax on certain stock option exercises and expenses related to stock option investigation. Expenses related to the 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. 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.

For More Information

AMCC management will be holding a conference call today, January 30, 2007, at 2:00 p.m. Pacific Time/5:00 p.m. Eastern Time to discuss the Company’s financial results for the third quarter of fiscal 2007 and to provide guidance for the fourth quarter of fiscal 2007. You may access the conference call via any of the following:

Teleconference:	913-981-5584
Conference ID:	9540488
Web Broadcast:	http://www.amcc.com
Replay:	719-457-0820
	(Available for 7 days following the call)

AMCC Overview

AMCC is a global leader in network and embedded PowerPC^® processing, optical transport and storage solutions. Our products enable the development of converged IP-based networks offering high-speed secure data, high-definition video and high-quality voice for carrier, metropolitan, access and enterprise applications. AMCC provides networking equipment vendors with industry-leading network and communications processing, Ethernet, SONET and switch fabric solutions. AMCC is also the leading vendor of high-port count SATA RAID controllers enabling low-cost, high-performance, high-capacity storage. AMCC’s corporate headquarters are located in Sunnyvale, California. Sales and engineering offices are located throughout the world. For further information regarding AMCC, please visit our web site athttp://www.amcc.com.

AMCC is a registered trademark of Applied Micro Circuits Corporation. The PowerPC name and logo are registered trademarks of IBM Corporation and used under license there from. All other trademarks are the property of their respective owners.

-Financial Tables Follow-

APPLIED MICRO CIRCUITS CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

($ in thousands)

	Dec 31, 2006		March 31, 2006
	(unaudited)
ASSETS
Current assets:
Cash, cash equivalents and short-term investments	$	261,040	$	335,665
Accounts receivable, net		35,741		26,324
Inventories		37,273		24,941
Other current assets		16,351		12,618
Total current assets		350,405		399,548
Property and equipment, net		32,010		36,127
Goodwill and purchased intangibles		422,009		381,066
Other assets		12,099		8,685
Total assets	$	816,523	$	825,426
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	24,960	$	24,656
Other current liabilities		35,070		37,962
Total current liabilities		60,030		62,618
Stockholders’ equity		756,493		762,808
Total liabilities and stockholders’ equity	$	816,523	$	825,426

APPLIED MICRO CIRCUITS CORPORATION

GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

(in thousands, except per share data)

	Three months ended									Nine months ended
	Dec 31, 2006			Sept 30, 2006			Dec 31, 2005			Dec 31, 2006			Dec 31, 2005
Net revenues	$	76,642		$	76,364		$	65,243		$	222,685		$	194,851
Cost of revenues		37,799			35,536			30,017			104,863			91,943
Gross profit		38,843			40,828			35,226			117,822			102,908
Operating expenses:
Research and development		24,550			24,853			23,429			72,242			70,934
Selling, general and administrative		20,056			17,312			15,022			54,368			46,484
Amortization of purchased intangibles		1,350			1,188			1,107			3,645			3,481
Acquired in-process research and development		—			13,300			—			13,300			—
Restructuring charges		67			1,419			1,339			2,733			4,898
Total operating expenses		46,023			58,072			40,897			146,288			125,797
Operating loss		(7,180	)		(17,244	)		(5,671	)		(28,466	)		(22,889	)
Interest and other income, net		3,121			3,429			4,940			9,915			11,881
Loss before income taxes		(4,059	)		(13,815	)		(731	)		(18,551	)		(11,008	)
Income tax expense (benefit)		113			74			(1,315	)		327			(964	)
Net income (loss)	$	(4,172	)	$	(13,889	)	$	584		$	(18,878	)	$	(10,044	)
Basic and diluted income (loss) per share:
Income (loss) per share	$	(0.01	)	$	(0.05	)	$	0.00		$	(0.07	)	$	(0.03	)
Shares used in calculating basic and diluted income (loss) per share		281,799			281,762			299,049			284,913			302,974

APPLIED MICRO CIRCUITS CORPORATION

RECONCILIATION OF GAAP NET LOSS TO NON-GAAP NET INCOME (LOSS)

(unaudited)

(in thousands)

	Three months ended									Nine months ended
	Dec 31, 2006			Sept 30, 2006			Dec 31, 2005			Dec 31, 2006			Dec 31, 2005
GAAP net income (loss)	$	(4,172	)	$	(13,889	)	$	584		$	(18,878	)	$	(10,044	)
Adjustments:
Stock-based compensation charges		2,723			2,677			1,458			7,911			4,443
Amortization of purchased intangibles		7,877			5,941			4,732			18,551			17,500
Restructuring charges		67			1,419			1,339			2,733			4,898
Realized gain on sale of strategic equity investment		—			—			(672	)		—			(672	)
Acquired in-process research and development		—			13,300			—			13,300			—
Payroll taxes on certain stock option exercises		—			—			1			1			1
Expenses related to stock option investigation		2,705			1,150			—			4,405			—
Income tax adjustments		(217	)		(212	)		(2,663	)		(523	)		(4,299	)
Total GAAP to Non-GAAP adjustments		13,155			24,275			4,195			46,378			21,871
Non-GAAP net income	$	8,983		$	10,386		$	4,779		$	27,500		$	11,827
Diluted income per share	$	0.03		$	0.04		$	0.02		$	0.10		$	0.04
Shares used in calculating diluted income per share		283,060			282,586			299,049			285,924			304,521
Income (loss) per share:
GAAP income (loss) per share	$	(0.01	)	$	(0.05	)	$	0.00		$	(0.07	)	$	(0.03	)
GAAP to non-GAAP adjustments		0.04			0.09			0.02			0.17			0.07
Non-GAAP income (loss) per share	$	0.03		$	0.04		$	0.02		$	0.10		$	0.04
Reconciliation of shares used in calculating the non-GAAP income per share:
Shares used in calculating the basic and diluted income (loss) per share		281,799			281,762			299,049			284,913			302,974
Adjustment for dilutive securities		1,261			824			—			1,011			1,547
Non-GAAP shares used in the EPS calculation		283,060			282,586			299,049			285,924			304,521

APPLIED MICRO CIRCUITS CORPORATION

SCHEDULE OF SELECTED GAAP TO NON-GAAP ADJUSTMENTS

(unaudited)

(in thousands)

The following schedule reconciles selected line items from the GAAP basis statements of operations to the non-GAAP statements of operations:

	Three months ended							Nine months ended
	Dec 31, 2006		Sept 30, 2006		Dec 31, 2005			Dec 31, 2006		Dec 31, 2005
GROSS PROFIT:
GAAP gross profit	$	38,843	$	40,828	$	35,226		$	117,822	$	102,908
Amortization of purchased intangibles		6,527		4,753		3,625			14,906		14,019
Stock-based compensation expense		148		157		21			439		68
Non-GAAP gross profit	$	45,518	$	45,738	$	38,872		$	133,167	$	116,995
OPERATING EXPENSES:
GAAP operating expenses	$	46,023	$	58,072	$	40,897		$	146,288	$	125,797
Amortization of purchased intangibles		1,350		1,188		1,107			3,645		3,481
Acquired in-process research and development		—		13,300		—			13,300		—
Stock-based compensation expense		2,575		2,520		1,437			7,472		4,375
Restructuring charges		67		1,419		1,339			2,733		4,898
Payroll taxes on certain stock option exercises		—		—		1			1		1
Expenses related to stock option investigation		2,705		1,150		—			4,405
Non-GAAP operating expenses	$	39,326	$	38,495	$	37,013		$	114,732	$	113,042
INTEREST AND OTHER INCOME, NET
GAAP interest and other income, net	$	3,121	$	3,429	$	4,940		$	9,915	$	11,881
Realized gain on sale of strategic equity investments		—		—		(672	)		—		(672	)
Non-GAAP interest and other income, net	$	3,121	$	3,429	$	4,268		$	9,915	$	11,209
INCOME TAX EXPENSE (BENEFIT):
GAAP income tax expense (benefit)	$	113	$	74	$	(1,315	)	$	327	$	(964	)
Income tax adjustments		217		212		2,663			523		4,299
Non-GAAP income tax expense (benefit)	$	330	$	286	$	1,348		$	850	$	3,335
RESEARCH AND DEVELOPMENT
GAAP research and development	$	24,550	$	24,853	$	23,429		$	72,242	$	70,934
Stock-based compensation expense		882		1,028		654			2,979		2,024
Payroll taxes on certain stock option exercises		—		—		1			—		1
Non-GAAP research and development	$	23,668	$	23,825	$	22,774		$	69,263	$	68,909
SELLING, GENERAL AND ADMINISTRATIVE
GAAP selling, general and administrative	$	20,056	$	17,312	$	15,022		$	54,368	$	46,484
Stock-based compensation expense		1,693		1,492		783			4,493		2,351
Payroll taxes on certain stock option exercises		—		—		—			1		—
Expenses related to stock option investigation		2,705		1,150		—			4,405		—
Non-GAAP selling, general and administrative	$	15,658	$	14,670	$	14,239		$	45,469	$	44,133