Linear Technology is a leading OEM of analog and mixed signal
semiconductors. March quarter results were above the Zacks
Consensus estimate, helped by higher revenue and
lower-than-expected expenses. The company provided encouraging
revenue guidance due to expectations of improved bookings momentum
in automotive and industrial markets. Linear's solid business
model, excellent products, ability to generate strong operating
cash flows and dividend yield are positives. Though the steady
growth and profitability of its core industrial, communications
infrastructure and automotive businesses may be positive for the
long term, the current sluggishness in these markets continue to
hurt its performance. We therefore have a Neutral recommendation on
Milpitas, CA-based Linear Technology Corporation (LLTC) is an
original equipment manufacturer (OEM) of high-performance analog
and mixed signal chips, such as power management components, data
converters, amplifiers and comparators. Customers embed these
semiconductor devices into various electronic systems or devices.
The company serves a diverse clientele in the communications,
industrial, computing, high-end consumer, automotive and
aerospace/military end markets.
End applications for Linear's products include cell phones,
networking products, notebook computers, computer peripherals,
video/multimedia sets, industrial instrumentation, security
monitoring devices, digital cameras, MP3 players, complex medical
devices, automotive electronics, factory automation and process
control systems, as well as military and space systems.
The company uses its California and Washington facilities to
manufacture most of its semiconductor wafers, which are the raw
material from which a semiconductor chip or device is constructed.
The assembly and testing is conducted in the Far East, utilizing
both in-house and third party resources. Linear has expanded
testing and assembly capacity in Singapore and assembly operations
in Penang (Malaysia). It has also made additions to the existing
Camus and Milpitas facilities.
The marketing effort is split, both nationally and
internationally, between a direct sales force, electronics
distributors and individual sales representatives. The bulk of
orders are received through direct marketing staff and distribution
channels, which enable LLTC to reach over 15,000 OEMs around the
world. The company has five distributors in North America, ten in
Europe, three in China, eight in Japan, two in Taiwan, two in
India, and one each in Korea, Singapore, Malaysia, Thailand, South
Africa, Philippines, Israel, Brazil, Australia and New Zealand.
Linear provides sales support through its many sales offices across
North America, Europe and Asia, as well as two independent sales
representatives, one of which is in the U.S. and one in South
In fiscal year 2013, Linear Technology had sales of $1.28
billion, of which 29% was generated domestically, 36% came from the
Asia/Pacific region (ex-Japan), 16% from Japan and 19% from Europe.
The largest customer in 2013 was a distributor, Arrow Electronics,
which generated 13% of revenue. No other customer generated more
than 10% of sales in 2013.
Linear Technology Corporation (LLTC): Read the Full
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