Meghan,
Another article dated 2/23/98 from Electronic Buyers' News:
Based on these articles, the sale to Adaptec is clearly a positive.
It streamlines the company....I'm very impressed by the areas that ADI seems to be focusing on....much more consumer oriented than before.
They are in the digital camera market, modems, game peripherals, etc.
Tom C.
ADI braked by excess inventory
By: Ismini Scouras
Results included an $8 million write-off as one GSM customer found itself
squeezed by Asian woes and was forced to default on its payments, the company
said.
While overall conditions in the wireless market appear to be relatively
healthy, ADI's major GSM-handset customers, including Siemens AG and Philips
Electronics N.V., are rapidly losing market share to Ericsson Telecom and Nokia,
analysts said. Siemens' handset business is also vulnerable in Asia, they added.
"The basic analog business is doing just fine," said analyst Mark FitzGerald,
of UBS Securities Equity Research, San Francisco. But strength in ADI's
analog-IC business, which accounted for approximately 75% of company sales, was
offset by poor performance within some of its system-level IC business,
including GSM, disk drives, and micromachining devices, FitzGerald said.
Market conditions should see no further erosion, according to other analysts,
who added that ADI has probably bottomed out.
Still, ADI hinted in a conference call last week that it might "restructure
or exit" the hard drive IC business, which has been at depressed levels, said
Krishna Shankar, an analyst at DLJ Securities, San Francisco.
Excess inventory in the GSM wireless-handset business and weak demand for
hard drive ICs sliced into Analog Devices Inc.'s revenue and net income growth
in its first fiscal quarter ended Jan. 31, the company said last week.
ADI's revenue increased 13.2%, to $330.7 million, compared with $292.1
million in the same quarter a year ago, but was flat sequentially. Net income
also showed a gain year-over-year, rising 13% to $44.2 million from $39.2
million, but fell 13.1% from the previous quarter, when net income reached $51
million.
The company could not be reached for comment.
"Clearly, it's a good news/bad news story," said Drew Peck, an analyst at
Cowen & Co., Boston. "The GSM phoneset business for them and everyone else has
been weak. Therefore, that has put some pressure on revenue and earnings during
the quarter. On the other hand, that was heavily offset by what appears to be
continued booming demand for analog components."
ADI's sales are expected to rise 5% to 7% sequentially as its analog and DSP
businesses "strengthen during the second quarter," said Jerald Fishman,
president and chief executive, in a statement.
"I believe that's going to be better than the average for most other
semiconductor businesses, because the analog business seems so unsually strong
right now relative to where memory and logic is," Peck said. |
