Analog Devices Profit Rises, Tops View; But Q1 Outlook Weak

(RTTNews) - Analog Devices Inc. (ADI) Tuesday reported an increase in profit for the fourth quarter, as a drop in revenues were masked by strong gross margins and a gain on asset sale. Earnings for the quarter trumped analysts' expectations, but revenues fell short of estimates.

Moving ahead, the Norwood, Massachusetts-based microchip maker detailed a weak outlook for the first quarter. Shares of Analog Devices were down over three percent in extended trading hours.

For the past few quarter, Analog Devices has reported a drop in revenues, as the semiconductor industry goes through a slump, hurt by slowing demand amid economic uncertainties.

"Revenue for the fourth quarter increased 1 percent sequentially, a good result in an uncertain macroeconomic climate," said Chief Executive Vincent Roche.

Analog Devices, which competes with Broadcom, Microchip Technology and Cirrus Logic, said its revenues for the quarter fell to $678.13 million from $694.96 million last year. Twenty-three analysts polled by Thomson Reuters expected revenue of $688.46 million for the quarter.

Revenues from industrial segment, which represents almost half of total revenues, rose 2 percent, while consumer revenues slumped 31 percent from last year. Communications market revenues fell 2 percent, while automotive division jumped 19 percent, year-over-year.

Gross margins for the quarter improved to 65.6 percent from 63.8 percent in the same quarter a year ago.

Analog Devices' fourth-quarter profit rose to $201.55 million or $0.64 per share from $179.19 million or $0.58 per share for the year-ago quarter.

Among other items, Analog Devices recorded a gain of $85.4 million from the sale of microphone product line during the quarter.

Excluding gain on asset sale, tax-reserve impacts and restructuring-related expenses, adjusted earnings for the quarter were $0.62 per share. On average, 26 analysts earnings of $0.58 per share for the quarter. Analysts' estimates typically exclude special items.

For the past several quarters, Analog Devices has been issuing weak outlook, amidst the weak economy. The trend seems to continue unabated.

"In the near-term we are entering a slower seasonal period, with customer shutdowns and inventory reductions coinciding with the holidays in December and January. As a result, our plan is for revenue to decline in the first quarter compared to the prior quarter," said Roche.

Looking forward to the first quarter, the company expects earnings of $0.44 to $0.52 per share and revenue to decline in a range of 5 to 10 percent. Analysts currently expect the company to post earnings of $0.56 per share and revenue to improve 9.4 percent in the quarter.

The company also declared a dividend of $0.34 a share, to be paid on December 17 to shareholders of record on December 6.

ADI closed Tuesday's trading at $49.92, up $0.26 or 0.52%, on a volume of about 2 million shares on the Nasdaq. The stock, however, slipped $1.65 or 3.31% in the after-hours trade.