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Analog Devices Shares Jump on Strong Earnings, Positive Outlook

Reuters
Thursday, 22 Feb 2007 | 11:08 AM ET

Analog Devices posted a higher quarterly profit after markets closed Wednesday as the maker of analog and digital signal processors benefited from strong sales of consumer products like flat-screen televisions and video game controllers.

Shares of Analog Devices leaped Thursday as investors responded to an optimistic outlook that the company announced along with earnings. The stock tacked on almost 5% after markets closed Wednesday.

Also Thursday, Citigroup raised its rating on Analog Devices to buy from hold, and Prudential raised its price target on the stock to $35 to $33.

Analog Devices forecast that profit for its current quarter would be 37 cents to 42 cents a share, after special items, on revenue of between $640 million to $670 million.

Analysts had forecast Analog Devices would show a fiscal second-quarter profit, excluding items, of $139.3 million, or 39 cents a share, on revenue of $655.1 million.

The company said net profit in its first fiscal quarter ended Feb. 3 was $153.2 million, or 44 cents a share, compared with $120.6 million, or 32 cents a share, a year earlier. Excluding items, earnings were 40 cents a share or 1 cent below the consensus estimate of analysts polled by Thomson Financial.

The profit was boosted by one-time items such as a $35 million technology license fee and $10 million in tax savings.

Revenue rose 11% to $691.6 million, well above estimates of $652 million.

Although sales to the consumer products industry make up only one-fifth of Analog Devices' total revenue, such sales jumped 35% from a year earlier.

Excluding special items, Analog Devices said it earned 40 cents a share, ahead of the 38 cents a share that was the average forecast.

The company's rivals include National Semiconductor, Texas Instruments, and Linear Technology.

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Shares in Analog Devices had fallen nearly 13% over the past year as of Wednesday, compared with a decline of 15% for National Semiconductor, 14% for Linear, and a rise of 0.8% for Texas Instruments.

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