(RTTNews) - Chipmaker Analog Devices Inc. (ADI: News ), Monday said its fourth quarter profit declined 27% from last year, hurt by shrinking margins, and lower demand for its products. However, the company posted a better-than-expected earnings for the quarter that breezed ahead of the analysts' expectations, as did quarterly revenue. Looking ahead, the company provided its earnings outlook for the first quarter, expected to come in ahead of the Street consensus.

The Norwood, Massachusetts-based company posted net income of $105.6 million or $0.36 per share for the fourth quarter, down from $143.9 million or $0.49 per share in the prior year quarter. On average, 21 analysts polled by Thomson Reuters expected the company to report earnings of $0.26 per share for the fourth quarter. Analysts' estimates typically exclude special items.

Operating income from continuing operations was $128 million or 22.5% of revenue, compared to $161 million or 24.3% of revenue in the previous year quarter.

As a percentage of revenue, gross margin dropped to 56.3% from 61.1% in the year-ago quarter.

Fourth quarter revenue declined 13% to $572 million from $661 in the same quarter last year. Eighteen analysts had a consensus revenue estimate of $523.84 million for the fourth quarter.

Earlier, Analog Devices estimated earnings from continuing operations of $0.24 to $0.26 per share, and revenue of $510 million to $530 million for the fourth quarter.

In terms of end market, Analog Devices' revenue from industrial customers, which represented 52% of total revenue, dropped 14% over last year. Revenue from communications customers, which amounted to 21% of total revenue, declined 25% on a year-over-year basis.
Revenue from computer customers, which was 2% of total revenue, dropped 45% from a year ago, reflecting the overall weakness in the PC market worldwide.

However, revenue from consumer customers, which accounted for 25% of total revenue, grew 7% over a year earlier.

In terms of product, analog revenue, which accounted for 91% of total revenue, declined 12% for the fourth quarter of fiscal year 2009. Revenue from digital signal processing products, 9% of total revenue, decreased 25% year-over-year.

Inventory at the end of the fourth quarter of fiscal 2009 decreased approximately $23 million or 8% over the prior quarter. Days in inventory decreased to 92 days at the end of the fourth quarter of fiscal 2009 from 112 days at the end of the immediately prior quarter.

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