Order cancellations as Book to bill crashed from 1.15 to .80
Fishman said during a conference call that he looked at the dropoff in order rates as a "cyclical pause after a very few overheated ordering quarters" rather than a longer-term downtrend.
S&P DOWNGRADES SHARES OF ANALOG DEVICES TO HOLD FROM BUY
Recent Price: $33.83 Recommendation: HOLD ??
July-Q EPS of $0.43 vs. $0.39 is $0.02 below our estimate. Sales and margins were below our projections, reflecting weak customer order rates. We are concerned about ADI's Oct-Q
guidance for flat sequential sales and margins, especially given upbeat guidance from peer Maxim Integrated (MXIM 43.9****) a week ago. We are cutting our FY 04 (Oct.) estimate to $1.54 from $1.64, FY 05 to $1.80 from $2.30, and our 12-month target price to $37 from $70, based on P/E
and price/sales analyses. Given relatively weak outlook we see, we expect ADI to trade below peers and historical norms.
Analog Devices Plunges on Weak Outlook
By TSC Staff 8/13/2004 10:41 AM EDT
Analog Devices (ADI:NYSE - commentary - research) dropped 5% early Friday after the big chip company became the latest tech giant to warn that cautious customers are weighing on sales trends. The drop came even after the Norwood, Mass., company doubled its third-quarter profits and boosted its stock-buyback plan. For its third quarter ended July 31, the company earned $169 million, or 43 cents a share, up from the year-ago $79 million, or 21 cents a share. Revenue rose 38% from a year ago to $718 million.
The numbers were short of the Thomson First Call analysts' estimate, which called for earnings of 45 cents a share on revenue of $739 million. "Our results in the third quarter were mixed, as margins improved and the balance sheet remained strong, but declining order rates led to slower than expected revenue growth," said CEO Jerald G. Fishman. "The highest growth came from communications applications which span wireless, broadband, and a range of other telecommunications equipment." The company said a high cancellation rate pushed its book-to-bill ratio, reflecting the balance of orders received and products shipped, down to 0.8 for the quarter, a very bearish sign. "Our customers appear somewhat more cautious in the short term and therefore, we are planning for fourth quarter revenue that is approximately flat compared to third quarter revenue," Fishman added. "We also expect gross margins and EPS for the fourth quarter to be about the same as for the third quarter." That would put fourth-quarter earnings at around 43 cents a share on revenue of around $718 million, which is well short of the 49-cent, $778-million Wall Street estimate. The company's cautious comments are similar to those heard from around the tech sector in recent weeks, notably Thursday from tech giant Hewlett-Packard (HPQ:NYSE - commentary - research).
Analog Devices falls on Q3 results
By Chris Kraeuter, CBS.MarketWatch.com -Aug. 13, 2004
NEW YORK (CBS.MW) - Shares of Analog Devices fell almost 5 percent Friday after the chipmaker said slowing orders in June and July caused it to miss Wall Street's financial targets for the fiscal third quarter. The company reported results after markets closed on Thursday. Analog shares (ADI: news, chart, profile) slid 4.7 percent to $32.21 -- a 14-month low. The stock is down 26 percent this year. Addressing the issue, Analog Devices' board declared a $500 million stock buyback program Thursday. "Over the past three quarters, customers were ordering well ahead of consumption and the book-to-bill ratio was above 1.15," said Chief Executive Jerald Fishman. "In the third quarter, the economy became more uncertain and since lead times shortened, customer and distributor order rates slowed." Fishman said during a conference call that he looked at the dropoff in order rates as a "cyclical pause after a very few overheated ordering quarters" rather than a longer-term downtrend. For the quarter ended July 31, Analog Devices, based in Norwood, Mass., reported net income of $169 million, or 43 cents a share, on sales of $717.8 million. During the same quarter last year, the company reported net income of $152.6 million, or 39 cents a share, on sales of $678.5 million. Analysts polled by Thomson First Call had expected earnings of 45 cents a share and sales of $740.2 million, on average. For the fourth quarter, Analog Devices said it expects flat sales and flat earnings. Analysts had expected earnings of 49 cents a share and sales of $780.8 million.
AI
Market Data 
Markets 
