ADI Q4 Signals Wireless DSP Sell Off, Analyst Suspects
By Colleen Taylor -- 11/15/2006
Electronic News
Analog Devices Inc. (ADI) this week announced fiscal Q4 results that had some industry watchers wondering if the company would sell off assets soon.
According to a research note from Lehman Brothers, a sale of ADI's wireless DSP business "appears imminent" after the company's recent earnings release. "We note that ADI has missed its sales forecast in seven out of the past 10 quarters," Romit Shah, a VP at the firm, said in the note.
ADI could not be immediately reached for comment.
Total ADI Q4 revenue of $644.3 million was a 4 percent increase over fiscal Q4 2005 and a 3 percent decrease from Q3. For the year, revenue was $2.57 billion, an increase of approximately 8 percent compared to fiscal 2005.
Net income under generally accepted accounting principles (GAAP) was $138.4 million in Q4, or 21.5 percent of sales. That's down from Q3, when the company reported income of $144.7 million on revenues of $663.7 million. For the fiscal year 2006, GAAP net income was $549.5 million, or 21.4 percent of sales.
The lackluster results were attributed to ADI's industrial work, and not its consumer customers, according to Jerald Fishman, the company’s president and CEO. “The [consumer] revenue growth was driven by strong sales of digital cameras, home entertainment systems and new video game consoles. … Revenue from computer customers also increased sequentially during the quarter, while revenue from our broad base of industrial customers was approximately flat sequentially."
Indeed, while consumer and computing segments were up 13 percent and 6 percent quarter-over-quarter, respectively, industrial was flat and communications was down 18 percent “due to weakness in handsets and wireless infrastructure,” Shah noted.
Fishman added “While revenue from general-purpose digital signal processing (DSP) products grew 10 percent in fiscal 2006 compared to fiscal 2005, this increase was offset by declines in revenue from application-specific DSP products."
ADI's Q1 2007 outlook is decidedly lackluster, also. Looking ahead, ADI said it expects Q1 revenues of $606 million, down 6 percent quarter-over-quarter.
The company’s stock today showed signs of a small slip in afternoon trading, down to $33.70 at 2:30 p.m. eastern time from the day’s open of $34.10 |
