Chipmaker Analog Devices, Inc. (ADI) said Tuesday after the markets closed that its third quarter profit more than tripled from last year, as revenue surged and margins improved amid strong sales to industrial and communications infrastructure customers.
The company's quarterly earnings per share came in above analysts' as well as its own expectations. At the same time, the company forecast fourth quarter revenue and earnings above analyst' current consensus estimates.
The Norwood, Massachusetts-based company reported net income for the third quarter of $199.5 million or $0.65 per share, compare to $65.5 million or $0.22 per share for the year-ago quarter.
On average, 21 analysts polled by Thomson Reuters expected the company to earn $0.60 per share for the third quarter.
Gross margin for the third quarter improved to 66.7% from 54.1% a year ago, mainly due to lower manufacturing costs, increased factory utilization, and strong sales of products sold to industrial and communications infrastructure customers.
Operating margin for the quarter increased to 34.9% from 16.0% in the prior year quarter.
Revenue for the quarter rose 46% to $720.29 million from $491.99 million in the same quarter last year. Nineteen analysts had a consensus revenue estimate of $706.50 million for the third quarter.
Results were better than the company's own expectations. In May, the company had forecast revenue of $695 million to $715 million and earnings of $0.59 to $0.61 per share for the third quarter.
"ADI had a strong third quarter, delivering sequential sales growth of 8% with the largest increases occurring in the industrial and communications infrastructure markets," said Jerald Fishman, ADI President and CEO. "Our continued profitability gains are the result of strong revenue growth coupled with a fundamentally improved cost structure."
For the third quarter, revenue from the company's industrial end market surged 69% year-over-year to $340.5 million, while revenue from automotive market rose 62% to $83.5 million and revenue from communications end market jumped 24% to $153.7 million.
Total analog products revenue for the quarter increased 46% to $659.7 million, while digital signal processing revenue rose 52% to $60.4 million for the third quarter.
The company also declared a cash dividend of $0.22 per share, which will be paid on September 15 to all shareholders of record on August 27.
Looking forward to the fourth quarter, the company forecast revenue of $740 million to $770 million and earnings of $0.68 to $0.72 per share. Analysts currently expect the company to earn $0.61 per share on revenue of $715.51 million for the fourth quarter.
Gross margin for the fourth quarter is expected to be 66% to 67%, while operating margin for the quarter is expected to be 35% to 36%.
Fishman said, "Looking ahead to the fourth quarter, given our higher opening backlog, we are expecting continued revenue growth."
Chipmakers have reported strong results recently. Texas Instruments Inc. (TXN) last month reported second quarter that profit more than doubled from last year, driven mainly by the strengthening demand in worldwide chip market on 3G and other electronic equipment sales.
Analog Devices shares, which have traded in a range of $25.26 to $32.19 over the past year, closed Tuesday's regular trading session at $28.81, up 45 cents or 1.59%. The stock is currently gaining 70 cents or 2.47% in after hours trading.
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