Analog Devices Inc. rode the fledgling electronics industry recovery to a solid performance in its latest fiscal quarter, with all segments of the company's operations recording higher-than-expected sales.
The analog IC manufacturer appears to have more good news in store for investors, especially for its fiscal 2004 first quarter, which ends in January. Order backlog has risen to a two-year high and demand remains strong in the consumer electronics and personal computer markets and in every region of the world, the Norwood, Mass., company reported last week.
"With increasing backlog and improving visibility, the company should have sustained revenue growth and slight gross margin expansion throughout 2004," said Brian Wu, an analyst with Bear Stearns & Co. Inc., New York, in a report.
In its fiscal fourth quarter ended Nov. 1, Analog Devices (ADI) swept past analysts' revenue and earnings per share estimates and recorded higher net income despite restructuring charges.
The company reported net income for the latest quarter of $88 million, or 25 cents a share on a pro forma basis, up 153% from $34.8 million, or 9 cents a share, in its fiscal 2002 fourth quarter. Analysts were expecting ADI to report pro forma earnings per share of 23 cents and revenue of $544 million.
Revenue in the quarter rose to $557.5 million from $455.7 million a year ago and $520.5 million in the fiscal 2003 third quarter.
"The fourth quarter wrapped up what turned out to be a great year for ADI," said president and chief executive Jerald Fishman, in a statement.
"Continuing strong orders led to fourth-quarter revenues coming in higher than we had anticipated at the beginning of the quarter, with substantial contributions from both analog and DSP products," he said.
Reflecting the electronics industry's recovery, ADI said its orders for the first quarter of fiscal 2004 rose 30% over the current quarter.
"We are planning for the recovery that began seven quarters ago for ADI to continue in the first quarter of fiscal 2004," Fishman said. "As a result, we are planning for revenues to grow approximately 5% sequentially and for earnings per share to be in the range of 27 cents to 28 cents in the first quarter of fiscal 2004."
The company's latest results included a restructuring charge of $9.2 million associated with the closure of a small optical applications business in Europe. Restructuring charges in the same quarter last year were $6.3 million, along with a charge of $2.1 million for investment impairment.
For the 2003 fiscal year, Analog Devices' profits rose to $298.3 million, or 78 cents per share, from $105.3 million, or 28 cents per share, in fiscal 2002. Revenue grew 20%, to $2.1 billion from $1.7 billion in fiscal 2002, which represented a 25% decline from fiscal 2001.
The company also improved its cash position during the just-completed quarter, according to Fishman.
"During the quarter we redeemed our $1.2 billion of convertible debt and ended the quarter with $2.1 billion of cash and short-term investment balances and no debt," he said.