Analog Devices Inc. (ADI: Quote) Tuesday reported a lower third-quarter profit, as revenues declined 10 percent reflecting lower demand at its industrial, consumer and communications businesses. Nevertheless, earnings for the quarter were in line with analysts' expectations, while revenues fell short of estimates.
Moving ahead, the Norwood, Massachusetts-based microchip maker detailed a soft fourth-quarter outlook, which is indicated to fall short of current estimates.
Analog Devices has witnessed profit decline in each of the last three quarters. The semiconductor industry has been going through a slump for the past few quarters, hurt by slowing demand, as economic uncertainties have forced customers to reduce their inventory level. Nonetheless, sequential improvements in revenues and gross margins give a positive outlook for the future.
Chief Executive Jerald Fishman said, "Given the economic headwinds and uncertainty in most regions, we were encouraged by consistent order patterns among customers and distributors and by the resilience of our large and broad-based industrial business, as well as the communications, automotive, and consumer end markets."
Analog Devices, which competes with Broadcom, Microchip Technology and Cirrus Logic, said its revenues for the quarter dropped to $683.0 million from $757.9 million last year. Twenty-two analysts on a consensus estimated revenues of $692.06 million for the quarter.
On a sequential basis, third-quarter revenues and earnings grew 1 percent and 6 percent, respectively.
Revenues from industrial segment, which represents almost half of total revenues, declined 12 percent, while consumer revenues slumped 19 percent from last year. Communications market revenues fell 11 percent, while automotive unit gained 12 percent, year-over-year.
Gross margins for the quarter dropped to 65.6 percent from 67.2 percent in the same quarter a year ago. However, sequentially gross margins improved 40 basis points, hinting a recovery.
Analog Devices' third-quarter net income slipped to $169.8 million or $0.56 per share from $219.9 million or $0.71 per share last year. On average, 24 analysts polled by Thomson Reuters expected earnings of $0.56 per share for the quarter. Analysts' estimates typically exclude special items.
For the past several quarters, Analog Devices has been issuing weak outlook, amidst the weak economy. The trend seems to continue unabated.
For the fourth quarter, the company expects earnings of $0.54 to $0.60 per share and revenues of $685 million to $715 million. Analysts currently expect earnings of $0.60 per share on revenues of $714.60 million for the quarter.
The company declared a dividend of $0.30 per share, payable on September 12 to shareholders as of August 31.
ADI closed Tuesday's trading at $40.34, down $0.20 or 0.49%, on a volume of 3.1 million shares on the NYSE .
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by RTT Staff Writer
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