DOW JONES NEWSWIRES
Analog Devices Inc.'s (ADI) fiscal third-quarter profit dropped
53% on lower sales and margins, but the company said orders and
business conditions are improving.
Shares of the semiconductor company fell 5.2% to $25.80 in
after-hours trading, though the company's results and rosy
fourth-quarter outlook topped Wall Street expectations. The stock
has gained about three-quarters from a 10-year low in December but
is still down about 20% from a year ago.
Chief Executive Jerald Fishman said order rates from industrial
customers began to improve in the quarter and remained strong in
the first two weeks of August.
Analog Devices, which specializes in devices that measure
information such as temperature or light and convert it into
digital data, has seen double-digit sales declines in the past few
quarters. But Fishman in June said he expects sales to improve in
the next fiscal year.
For the quarter ended Aug. 1, the second-largest analog-chip
maker after Texas Instruments Inc. (TXN) reported a profit of $65.5
million, or 22 cents a share, down from $138.6 million, or 47 cents
a share, a year earlier. Earnings from continuing operations fell
to 22 cents a share from 44 cents.
Revenue dropped 25% to $492 million.
In May, Analog Devices predicted earnings of 17 cents to 19
cents a share and revenue flat with the second quarter's $475
million, above analyst estimates at that time. Analysts expected
the company to top its guidance, with their latest estimates from a
Thomson Reuters analyst survey calling for per-share earnings of 20
cents on revenue of $479.6 million.
Gross margin fell to 54.1% from 61%, in line with the company's
forecast of 54% to 55%, as sales shifted to lower-priced items.
Inventory declined 11% from a year earlier, and operating
expenses dropped 22%.
New orders exceeded shipments, resulting in a book-to-bill ratio
above one and implying a positive business outlook. Opening backlog
also rose sequentially.
Industrial revenue, about half of the company's total revenue,
fell 29% and communications revenue declined 15%. Revenue in the
low-margin consumer business decreased 21% while computer revenue
sank 52%.
Among Analog Devices' products, analog revenue fell 23% and
accounted for 92% of total revenue by product type.
Looking ahead, Analog Devices expects fiscal fourth-quarter
earnings from continuing operations of 24 cents to 26 cents a share
on revenue of $510 million to $530 million. Analysts estimated
earnings of 24 cents a share on revenue of $498.3 million.
-By Kathy Shwiff, Dow Jones Newswires; 212-416-2357;
Kathy.Shwiff@dowjones.com
