Analog Devices Q3 Drops 19%
Online staff -- 8/11/2005
Electronic News
Primarily due to declines in sales of DSP-based products sold to wireless handset customers in Asia, Analog Devices announced revenue today for its fiscal Q3 ended July 30 of $582.4 million, down 3.5 percent sequentially from $603.7 million in Q2, and down 18.8 percent from $747.8 million in Q3 2004.
Revenue from analog products was nearly flat sequentially in Q3, totaling 84 percent of sales, after growing by 6 percent between Q1 and Q2.
Diluted earnings per share (EPS) was 32 cents in Q3, while net income increased to $121.4 million or 21 percent of sales for Q3, up 3 percent from $117.6 million in Q2.
The company also said its board declared a cash dividend of 10 cents per outstanding share of common stock for Q3.
Gross margins increased to 58.1 percent in Q3, 70 basis points higher than Q2, primarily due to a favorable mix of high margin product sales and the benefit of product cost reductions achieved over recent quarters.
Q3 operating expenses declined approximately 4 percent compared to Q2.
The improvement in gross margins combined with the decline in operating expenses resulted in an operating profit margin of 23.1 percent of sales, up from 22.2 percent recorded in Q2, the company explained.
By end market, sales to medical, defense and industrial instrumentation customers increased in Q3 compared to Q2, but were offset by declines in sales to automatic test equipment (ATE) and automotive customers. Overall, the industrial markets totaled approximately 41 percent of sales in Q3. The computer market had the strongest sequential growth in Q3 and was approximately 16 percent of sales. Revenue from the consumer segment also increased sequentially and represented 16 percent of sales in Q3. The communications market was generally weak due to lower sales of products used in wireless and broadband applications, where communications customers represented approximately 27 percent of Q3 sales.
On a geographic basis, Q3 revenue compared to Q2 grew in Japan, was approximately flat in North America, and declined in the other regions of the world. As a result, approximately 20 percent of sales were in Japan, 26 percent of sales in North America, 22 percent of sales in Europe, and 32 percent of sales were in China and the rest of Asia, Analog Devices reported.
Looking ahead, Jerald Fishman, president and CEO of the Norwood, Mass.-based company, said in a statement, “We continue to believe that overall, we are in a gradual recovery that began six months ago. Good order trends, higher backlog at the start of the quarter, and the beginning of what is typically a seasonally strong period for consumer-oriented products leads us to plan for sequential revenue growth of 1 to 4 percent.”
“Depending on the mix of analog and DSP product sales, our gross margins for the fourth quarter are planned to improve modestly and we are planning for operating expenses to be up slightly on a dollar basis. As a result, our plan for the fourth quarter is for EPS in the range of 32 to 34 cents,” he concluded.
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