Analog Devices Earnings: Four Quarters in a Row of Falling Profit

S&P 500 (NYSE:SPY) component Analog Devices Inc. (NYSE:ADI) reported its results for the second quarter. Analog Devices designs, manufactures, and markets analog, mixed-signal, and digital signal processing integrated circuits used in industrial, communication, computer, and consumer applications.

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Analog Devices Earnings Cheat Sheet for the Second Quarter

Results: Net income for Analog Devices Inc. fell to $162.9 million (53 cents per share) vs. $241.8 million (78 cents per share) a year earlier. This is a decline of 32.6% from the year-earlier quarter.

Revenue: Fell 14.6% to $675.1 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: Analog Devices Inc. beat the mean analyst estimate of 51 cents per share. Analysts were expecting revenue of $665.7 million.

Quoting Management: “ADI produced solid results for the second quarter. Compared to the immediately prior quarter, revenue grew 4%, led by strong sales across a wide range of industrial applications, and also increased sales into communications infrastructure applications. Diluted EPS grew 15%, well ahead of revenue growth, as gross margin and operating income expanded by 200 and 320 basis points, respectively. Operating cash flow continued to be very strong at $226 million, or approximately 34% of sales,” said Jerald G. Fishman, President and CEO. “Order rates and backlog also grew compared to the prior quarter, which leads us to plan for continued sequential growth of revenue in the third quarter.”

Key Stats:

The company’s net income has fallen for the last three quarters. In the first quarter, net income fell 37.2% from the year earlier, while the figure fell 18.4% in the fourth quarter of the last fiscal year.

The company beat estimates last quarter after falling short in the previous two quarters. In the first quarter, it missed the mark by 2 cents, and in the fourth quarter of the last fiscal year, it came in under estimates by 3 cents.

Revenue has fallen for the past three quarters. In the first quarter, revenue declined 11% to $648.1 million while the figure fell 7% in the fourth quarter of the last fiscal year from the year earlier.

The company’s cost of sales slipped to $234.6 million, a dip of 32.4% from a year ago. Last quarter, cost of sales was 34.8% of revenue versus 32.4% a year earlier.

Looking Forward: The outlook for the company’s results in the upcoming quarter is unfavorable. The average estimate for the third quarter is 58 cents per share, down from 61 cents ninety days ago. For the fiscal year, the average estimate has moved down from $2.28 a share to $2.18 over the last ninety days.

(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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