3Ware 2001 Annual Report Download - page 4

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To our stockholders and friends
Overall, this past year has been one of substantial growth at AMCC. We extended our market
expertise through technological breakthroughs and our strategic acquisitions. As a result, we saw
significant revenue increases. However, we also saw dramatic market shifts in the fourth quarter
that pose significant challenges to AMCC, our industry and our markets moving forward.
In our fourth quarter, the communications integrated circuit (IC) industry and its customers
experienced an unanticipated downturn. This decline was the result of an inventory buildup in our
targeted equipment segment due to a rapid and unexpected change in the buying patterns
of telecommunications service providers. Service provider capital expenditures (CAPex) were
much lower than our customers anticipated, which resulted in excess inventory at the network
capacity level and compounded the uncertainty about equipment-level inventory. We believe that
this adjustment in spending patterns was a result of service providers moving from a “build it and
they will come” to a “build it when it will generate profit” philosophy.
We believe this slowdown is not a trend, but a bump in the road. Although the duration of the slow-
down remains uncertain, we remain confident about the long-term viability of the markets we serve
and our ability to meet the needs of these markets. Overall, fiscal 2001 represented solid growth
compared to the prior year. Revenue reached $435.5 million, an increase of 153% from the
$172.4 million of fiscal 2000. This included a growth in communications revenue of 182% from
$138.1 million to $388.5 million. Pro forma net income(1) also improved to $139.9 million,
up 186% from the previous year, with pro forma earnings per share(1) increasing from $0.21
to $0.48 in fiscal 2001. In addition, AMCC became a member of the Nasdaq 100 and S&P 500.
Despite near-term industry weakness and poor visibility, we remain confident in our end markets
and feel that AMCC is well positioned in those markets long-term. The Company’s strong commit-
ment to innovation continues, allowing us to introduce the industry’s first commercially available
(1)See page 13 in the financial section for an explanation of pro forma financials and amounts reconciling to GAAP basis results.
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fiscal year 2001
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FY 2001 Design Win
Lifetime Value (LTV)
by Market Segment
Core
46%
Metro
38%
Access
16%
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