Tuesday, February 8, 2011

Analog Devices Inc. (NYSE: ADI): Q1 Earnings Preview

Analog Devices Inc. (NYSE: ADI) is scheduled to release its fiscal first-quarter earnings after the closing bell on Tuesday, February 15, 2011. Analysts, on average, expect the company to report earnings of 65 cents per share on revenue of $728.16 million. In the year ago quarter, the company reported earnings of 43 cents per share on revenue of $602.98 million.

Analog Devices, Inc. engages in the design, manufacture, and marketing of analog, mixed-signal, and digital signal processing integrated circuits used in industrial, communication, computer, and consumer applications.

In the preceding fourth-quarter, the Norwood, Massachusetts-based company's net income was  $225 million, or 73 cents a share, compared with a profit of $105.6 million, or 36 cents a share, in the prior-year quarter. Revenue surged 35% to $770 million from $571.6 million. Analysts, on average, expected the company to report earnings of 70 cents per share on revenue of $755.81 million. 

At its last earnings call in November, the company said that it expects first quarter revenue to be in the range of $715 million to $740 million, down 4% to 7% sequentially, and up 19% to 23% on a year-to-year basis. The company anticipates fiscal first earnings per share from continuing operations in the range of 63 cents to 67 cents. Gross margins are expected to come in at 66% and operating margins at 34.5-35.5%. Analog Devices stated that while end markets continued to look strong, the company was likely to see higher turns in the business and lower backlog accumulation in the following quarter. 

The company's gross margins have expanded sequentially in each of the last five quarters. Gross margin improvements continue to come from higher volumes that enable better utilization rates, as well as a more favorable mix of business. 

The company is benefiting from increased industrial sales in Asia, including China. A global recovery after the sharp downturn last year also helped, as chip makers produced more chips to refill global inventories. Recently, the Semiconductor Industry Association said that worldwide semiconductor sales for 2010 reached a record $298.3 billion, a year-on-year increase of 31.8 percent from the $226.3 billion recorded in 2009. December quarter's sales of $75.5 billion represent a 4.0 percent decline from the immediate prior quarter, and a 12.2 percent increase over the same period in 2009.

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