Analog Devices Sees Growth As Business in Asia Expands
By REBECCA BUCKMAN
Staff Reporter of THE WALL STREET JOURNAL
November 18, 2004 4:28 a.m.
HONG KONG -- U.S. specialty chip maker Analog Devices Inc., which last month slashed its revenue and earnings estimates for its just-ended fourth quarter, should nonetheless post solid growth for its fiscal year as its business in Asia expands, President and Chief Executive Jerald G. Fishman said in an interview.
Analog Devices, based in Norwood, Mass., also is involved in a potentially lucrative collaboration with China's Datang Mobile to develop chips for mobile phones that will run on a new wireless standard being promoted by the Chinese government. Those phones, which are still being tested, could hit the market sometime after China issues new "third-generation", or 3G, wireless licenses, most likely next year. Analysts expect that at least one of the licenses will require use of the new Chinese technical standard.
"Handsets and 3G are the way we see the China market growing," said Mr. Fishman, who was in Hong Kong with other executives to attend a wireless-industry trade show. He declined to break out Analog's sales in China, but he said about 60% of the company's business now comes from Asia, including Japan.
Analog's overall sales and profit took a hit in the second half of its last fiscal year, which ended Oct. 30, because of a lag in orders, particularly among Asian customers in the wireless, semiconductor-capital equipment and consumer-products industries. Analog's chips serve as the brains inside products ranging from phones to digital cameras to equipment that tests semiconductors.
In late October, the company cut its fiscal fourth-quarter revenue estimate by 10% to 12% from the fiscal third quarter and said profits also would be lower than previous company projections. One big problem was excess inventory at some of Analog's wireless customers, which made the customers hesitant to order more components.
In the interview, Mr. Fishman declined to comment specifically on how such business conditions had affected Analog more recently. But extremely brisk sales in the first half of the year should help the company turn in "one of the best years in our history," he said.
In October, Analog said it expected sales growth of 29% for its 2004 fiscal year, ahead of its normal 20% to 25% rate. In 2003, the company had sales of $2.05 billion. Mr. Fishman said Monday the company's goal is to grow revenue to $5 billion in the next few years.
Right now, Analog has about 20 mobile-phone customers in China and "pretty large" market share, said Christian Kermarrec, an Analog vice president. On Monday, the company unveiled its first full chipset for phone-makers based on China's homegrown, TD-SCDMA standard. That stands for time-division synchronous code-division multiple access. In a statement released Monday, Mr. Kermarrec said he expected handset-design activity with the new standard "to increase rapidly over the coming months." |
