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Technology Stocks : ADI: The SHARCs are circling!
ADI 230.96+0.4%12:53 PM EST
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To: Dave Chanoux who wrote (729)12/4/1997 12:22:00 PM
From: SteveG  Read Replies (1) of 2882
 
<The 3 Com business is very significant in my opinion for these reasons:...>

Hi Dave-

I agree with your points, and think ADI is making great strides in distinguishing themselves as a premiere DSP player with single chip mixed signal.

Here are some H&Q highlights:

*Analog Devices reported Q4:FY1997 earnings of $0.28 (fully-taxed) on revenues of $332 million, a penny below our estimates and street consensus.

* Revenues of $333 million were up 5% sequentially but $7.5 million below our model. Higher than expected gross margins were offset by higher than expected operating expenses.

* The company announced that 3Com will be using ADI's single chip modem, which integrates DSP technology with analog and memory, for its
existing and future 56k modem cards. We believe this design represents a revenue opportunity in 1998 of $50-$75 million.

* We believe ADI's Standard Linear IC business experienced strong demand in the quarter driven by demand for high speed linear amplifiers and converters.

* We are trimming our estimates for ADI. For FY1998, we expect $1.33 on $1,510 million in revenue, down from $1.37 on $1,608 million. Our
estimate for Q1:FY1998 is $0.29 on revenues of $335 million, down from $0.30 on $360 million.

* We believe ADI is a technology rich company and we are maintaining our Buy Rating. Although we do not expect any near-term catalyst for the stock, we expect the company as well as the stock to continue to be a solid performer over the long term. We would be an aggressive buyer on weakness.

==========

Steve
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