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Technology Stocks : ADI: The SHARCs are circling! -- Ignore unavailable to you. Want to Upgrade?

To: Scrapps who wrote (2741)	5/17/2001 4:25:48 PM
From: Jim Oravetz	Read Replies (1) \| Respond to of 2882

Analog Devices Reports Second-quarter Pro Forma EPS of $0.31 on Revenues of $601 Million NORWOOD, Mass., May 17 /PRNewswire/ -- Analog Devices (NYSE: ADI) today announced revenues of $601 million for the second quarter of fiscal 2001, ended May 5, which were up 4% from the prior year's second quarter and 22% below the immediately prior quarter. Pro forma earnings per share were $0.31, compared to $0.32 reported for the year ago quarter and $0.50 for the first quarter of fiscal 2001. The quarter's earnings per share under generally accepted accounting practices were $0.27, with the difference due to the amortization of intangibles and other acquisition-related expenses. All remaining financial information in the text of this release refers to pro forma results, which exclude investment gains and acquisition-related expenses. "Our second-quarter results were in line with the revised guidance we communicated on April 12," said Jerald G. Fishman, President and CEO. "Analog product revenues were up 11% from the previous year's second quarter, but were down 19% sequentially as deteriorating market conditions impacted our analog business. This was the first sequential decline in analog product revenues during this cycle and the most precipitous decline in recent memory. DSP product revenues declined 18% year over year and 30% sequentially. "Most of the second quarter's decline in analog product revenues came from our largest communications, semiconductor automatic test equipment and contract manufacturing customers," said Mr. Fishman, "as they continued to struggle with excess inventories and uncertain demand. We also experienced some weakening among our industrial OEM customers, although much of this decline came from customers within the communications portion of our industrial customer base. Orders from PC manufacturers showed some strength late in the quarter, and overall our distribution business was relatively healthy, holding approximately flat to the first-quarter level. "The sequential decline in DSP product revenues was due primarily to significant cancellations and backlog adjustments from telecommunications customers and North American contract manufacturers. It is important to note that our DSP revenues grew last year by more than 100% in a market with a 25 to 30% per year secular market growth rate. While we clearly gained DSP market share, there is no doubt that some of last year's shipments ended up in inventories at a number of notable OEMs." Commenting on Analog's financial performance, Mr. Fishman said, "At 57.0% of sales, gross margin was down only slightly from the previous quarter, despite a reduction in production rates and booking over $20 million in inventory reserves. We reduced our operating expenses 4% sequentially through continuing efforts to constrain discretionary costs. The combination of these factors resulted in an operating profit of $144 million, or 24.0% of sales, which we believe is a commendable achievement during very weak market conditions. "Our balance sheet continued to strengthen in the second quarter," he continued. "Cash and short-term investments increased sequentially by $159 million to over $2.5 billion. Net inventories declined by $38 million during the quarter, while accounts receivable showed a $77 million sequential decrease." Regarding the near term, Mr. Fishman said, "We are currently assuming that weak market conditions will continue through our third fiscal quarter, to be followed by a modest resumption of revenue growth in the fourth quarter. Specifically, we believe third-quarter revenues could decline approximately 10% from the second-quarter level. We anticipate that earnings per share could be in the range of $0.23 to $0.25 at this revenue level. It remains our goal to keep our operating margin at above 20% of sales during this industry downturn. "While we remain cautious about the near term, we continue to believe that Analog Devices' long-term prospects are excellent. Despite current market conditions, our analog product revenues are likely to grow slightly this year, even after increasing more than 70% last year. And even though our DSP revenues could decline approximately 30% this year, this follows a year in which they grew more than 120%. Total revenues this year could be up 65 to 70% compared to fiscal 1999, with earnings more than double those of that year. We believe this would be an accomplishment very few semiconductor companies are likely to achieve this year. "There is clear and increasing evidence that signal processing is rapidly becoming the primary growth driver for the semiconductor industry," concluded Mr. Fishman. "We believe ADI is well positioned to grow its revenues at above-market rates as industry conditions improve, and to continue gaining market share in DSP and high-performance analog products while achieving good operating leverage on rising sales." Jim